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Innovation at 350 Knots: New jet could rewrite the rules of commercial air travel.
Nusiness 2.0 ^ | Aug., 30, 2002 | Erick Schonfeld

Posted on 09/06/2002 10:39:17 AM PDT by Ditto

Last Monday, Aug. 26, may go down as a milestone in the airline industry. It's certainly a milestone in the short history of Eclipse Aviation, a startup in Albuquerque, N.M., that, after four years of design and construction, managed to get a test version of its six-passenger jet off the ground. The Eclipse 500 spent an hour in the air, climbing to 9,000 feet and performing some basic maneuvers and system checks before landing.

The Eclipse 500 isn't just any old private jet. There are a lot of those already flying, of course. The Eclipse 500 promises to be so inexpensive that it could permanently alter the business of air travel. Eclipse plans to sell the jet for about $850,000 -- one-fourth the cost of the least expensive jet on the market, the Cessna Citation CJ-1. And it's engineered to be extremely cheap to operate: less than $1 per mile, one-third to one-fifth what it costs to fly other small jets. CEO and founder Vern Raburn envisions that these economics will allow a class of new air limo services to flourish. These services would operate fleets of Eclipse planes out of 10,000 or so municipal and private airports across the country, thus bypassing the clotted traffic at urban hubs. The major airlines, he says, "are doomed, but they don't know it yet." He compares them to "the guys building cars by hand when Ford introduced the Model T."

Following the test flight, I asked Raburn over the phone how it felt to finally see his baby take off. "I was a little busy to even think about it," he replied, though his excuse was legitimate -- he was flying the chase plane behind the Eclipse 500's maiden flight. As recently as a year ago, he was trying to raise $110 million merely to keep the program alive. The first $60 million tranche of that financing, set to close on Sept. 11, 2001, was completed by the skin of its teeth, amazingly. But after the terrorist attacks that morning, 90 percent of the second $50 million tranche, set to close in November 2001, "evaporated," says Raburn. Hat in hand, the well-connected Raburn managed to scrounge up another set of investors by February -- all of them individual angel investors. It helps that Raburn is pals with several billionaires, including Bill Gates, who was the best man at his wedding 16 years ago.

Given the airline industry's turmoil after 9/11 (US Airways is in bankruptcy, United (UAL) is on the brink, and American (AMR) is rethinking its route structure), the debut of Eclipse's plane seems more timely than ever. The problem with the major airlines is that they need to keep their planes fully loaded to eke out the slimmest of profits. With fewer people flying, the airlines are moving toward packing more people onto fewer flights, with longer waits on the ground for connections. "The airline industry will become a Greyhound bus type of world," Raburn predicts. Adding to these hassles are the more stringent security measures that go into effect after Dec. 31 (the new rules call for every piece of checked baggage to be screened, in addition to carry-ons). Simply put, flying is going to become even more stressful than it already is.

Of course, the airlines aren't going to disappear anytime soon, and Raburn's aircraft still has to be approved by the FAA (a 16-month process that just started with Monday's flight). But if the plane does win approval, it could usher in an alternative to the sardine-can air travel we are used to today, at least for business-class fliers. In order to deliver a jet at such a relatively low price, Raburn is rethinking the whole way small airplanes get built. When I visited him at Eclipse's headquarters last June, he took me through the renovated hangar at the Albuquerque airport where the test plane was being assembled. A wing was held within a large vise-like frame that Eclipse had designed. A manufacturing engineer was standing nearby holding a small, spherical laser tracker, which he placed at different points along the wing. The tracker -- a metallic, walnut-size hemisphere with prisms lining the inside -- caught a red laser beam and reflected it back to a sensor on a tripod. With this device, the engineer was comparing the dimensions of the half-finished wing with a computer model and making sure it did not deviate from the design by more than 0.003 inch. The more precisely each part is crafted, the faster Eclipse will be able to speed overall production.

"This airplane could not have been built without Moore's law," Raburn says. The engine also owes its existence to digital wizardry. Its turbofan blades, for instance, can be fabricated from a single piece of aluminum, thanks to advances in extremely precise, computer-controlled cutting tools. This makes it safer and less expensive to manufacture. Other high-end jets sometimes use fan blades made from a single piece of aluminum, but it's never been done on such a small scale for an aircraft engine. In fact, each of the two engines on the Eclipse 500 weighs just 85 pounds, yet delivers almost 800 pounds of thrust (a better thrust-to-weight ratio than any commercial turbofan ever built). Using such a small engine is crucial, since the size of the engine determines the size of the plane, and therefore its cost. Also for reasons of cost, much of the cockpit instrumentation will be digital, doing away with many analog gauges, switches, and dials. And the only hydraulic system in the entire plane is for the rear-wheel brakes. All the other hydraulics -- even the landing gear -- along with their attendant heavy tubing and fluids, will be replaced by electric motors.

Raburn is pioneering some manufacturing techniques as well. For instance, he is getting rid of most of the riveting that joins together the panels of the body and wings. Instead he's using a new process called friction-stir welding. In this technique, a pin rotates at high speeds against an aluminum surface, heating it through friction until the metal becomes almost plasticlike at the seam where the panels are joined. When the seam cools, it fuses into a single piece of metal. The process is faster and stronger than traditional welding, and Eclipse received FAA approval for it this summer. In another hangar, I saw a friction-stir-welded barrel that had undergone testing to see if it could withstand 250,000 cycles of pressurization and depressurization -- more than 12 times the number of takeoffs and landings a typical plane goes through in its lifetime. The barrel had withstood 472,000 pressurization cycles, and was just beginning to show signs of cracking.

If early orders are any indication, Eclipse will need all the help it can get from new technologies to meet demand. The factory will gear up to its full capacity of about 1,500 planes a year by 2007, but Eclipse has already sold every plane it plans to build between 2004 and the second quarter of 2006. That, plus other commitments further into the future, represent well north of $1 billion in orders. Many of the buyers are private pilots, but Raburn estimates that about two-thirds are people who want to set up air limo services. (Buyers have to put down an initial deposit of $100,000.)

Raburn's not out of the woods just yet, though. He figures he still needs another $65 million (on top of the $238 million raised so far) to get through FAA certification and to start production. But if he does make it, we may all be flying in air limos one day.


TOPICS: Business/Economy; Extended News; Miscellaneous; News/Current Events
KEYWORDS:
I want one of these!
1 posted on 09/06/2002 10:39:17 AM PDT by Ditto
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To: Willie Green
Faster than a speeding Maglev, Willie. ;~))
2 posted on 09/06/2002 10:40:36 AM PDT by Ditto
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To: Ditto
The engines sound like just the ticket for the new UAVs that the military wants!
3 posted on 09/06/2002 10:45:44 AM PDT by marktwain
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To: marktwain
Uh, you hit a bullseye. The engine is made by Williams, who also continues to make engines for UAV's and other small weird critters.
4 posted on 09/06/2002 10:53:12 AM PDT by AzJP
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To: Ditto
It helps that Raburn is pals with several billionaires, including Bill Gates, who was the best man at his wedding 16 years ago.

Good grief!
I wonder if this thing will crash as often as MS Windows?

5 posted on 09/06/2002 10:55:38 AM PDT by Willie Green
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To: Ditto
http://www.vansaircraft.com/

I'll settle for one of these.
6 posted on 09/06/2002 10:57:07 AM PDT by e_castillo
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To: marktwain
It is essentially the same engine used in a cruise missle.
7 posted on 09/06/2002 10:59:16 AM PDT by kylaka
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To: Ditto
Related thread: Microsoft: "Our products aren't engineered for security"
8 posted on 09/06/2002 11:01:08 AM PDT by Willie Green
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To: kylaka
It is essentially the same engine used in a cruise missle.

Does this mean that when it crashes it only hits Baby Milk factories and tents with camels?

9 posted on 09/06/2002 11:01:59 AM PDT by LenS
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To: Ditto
Thier predictions are absurd. So what if companies start buying these things. Do you really think anyone other then the execs are going to be flying on them? Sure, the one or two jets will be used to ferry the VIPs around, but the sales guys, consultants and other business types will still have to fly the airlines. If an exec needs to go to NY from say Houston, does anyone really think he's going to make a pit stop to let a sales guy off in Cedar Rapids? In order to have full coverage of most traveling employees, corps would have to buy so many of these things that they'd end up being cost prohibitive.

If they go the "sky taxi" or time-sharing (NetJet) route, the per person price would be huge as a lot of infrastructure would be necessary to support the 5-6 passengers per plane.

No, the average business person is going to keep flying on mainlines for a few more decades.

10 posted on 09/06/2002 11:09:25 AM PDT by StolarStorm
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To: StolarStorm
The only companies at risk from this jet are the ones that currently make Business Jets... that's the market segment that needs to be worried.
11 posted on 09/06/2002 11:10:55 AM PDT by StolarStorm
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To: e_castillo
Here's a neat little toy as well.

www.rotorway.com

Pretty cool. Your very own chopper at the same price as a luxury SUV. Some day, some day.......

12 posted on 09/06/2002 11:14:52 AM PDT by Space Wrangler
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To: StolarStorm
I don't think I agree with your analysis. It may be true that the number of airline passengers lured away is fairly small. But those are the most profitable passengers the airlines have.

Taking only four or five percent of the airline's highest paying passengers could prevent the airlines from ever regaining profitability with their current model. If that happens, they'll all follow Eastern, PanAm, USAir, et. al. into oblivion, leaving only the newest, most nimble competitors such as Southwest.

13 posted on 09/06/2002 11:24:17 AM PDT by Joe Bonforte
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To: StolarStorm
Maybe one more decade. Most of the huge jets have been built for economy of scale. If this thing works, we'll see 10-20 passenger jets hopping between points previously served only by bus. Huge planes are doomed if fear keeps them off the ground.
14 posted on 09/06/2002 11:27:16 AM PDT by js1138
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To: StolarStorm
A fortune 500 company might time share one of these babies among its top 5 or top 10 producers.

Maybe some small insurance agency won't, but a company where a top salesman brings in $10 million in revenue a year might have justification.
15 posted on 09/06/2002 11:29:11 AM PDT by jjm2111
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To: StolarStorm
Not absurd. Imagine how much time an employee or executive is spending driving to the airport, waiting in line, packing into the sardine cans, flying from one hub to another hub, driving from the airport to where he is going....

The time wasted is valuable to a company. In a small business jet, these same folks can fly from a much smaller airport closer to where they are to a much smaller airport closer to where they are going. These Eclipse jets are going to cost about the same to take as an airline, but close to half the time wasted. For example, if I want to go somewhere halfway across the country, I have to drive at least two hours to get to the nearest hub. But I live five minutes from IRK that has a big enough runway to handle a business jet. And if my destination is NOT a 'hub' city, I waste more time driving from the hub, I could literally save four hours from a cross country trip. That's more than the actual flight time!

The only problem I see is how long it's going to take to get these air taxi services equipped with Eclipses. And to hire me to fly one!

Mr.M
16 posted on 09/06/2002 11:38:08 AM PDT by Marie Antoinette
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To: jjm2111
It will also take over the small turboprop and a lot of the larger prop business.

I have been watching this for a few years now and would give my eye teeth for one.

The 6 place single that I totaled if purchased new today would be $486k so this plane is going to be well within reach of a large segment of the GA market. A 6-8 place turboprop is well over a million.
17 posted on 09/06/2002 11:40:38 AM PDT by dalereed
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To: StolarStorm
I dunno. If they do it right, it could be great. For instance, if 5 of my friends and I want to make a 500 mile road trip for a college ball game, we can all pile into the Suburban and chip in $25 apiece for the gas alone, take 7 to 10 hours each way to drive, counting stops, and spend our entire weekend on the road. Counting hotel at, say, $75/night, and on road meals/snacks at maybe $40, that's $140 each for the weekend.

If the operating cost of the air limo is $1/mile, that's $167 each. Even if it's $200 for a ticket, and maybe $250, some will pay if only to save wear and tear of 10-15 hours on the road. AND - I'm home all day Sunday, resting for the work week, and not driving. Not too far-fetched in my opinion.

18 posted on 09/06/2002 11:40:58 AM PDT by HeadOn
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To: Joe Bonforte
You're correct about these being the most profitable passengers. No doubt that the big boys will have to change their model a bit to more like SouthWest, but many of them will survive. The pie may be shrinking a bit for the majors, but it looks like capacity is about to decline (U and United). International will also continue to be strong and that is a market segment that Southwest doesn't compete in... and I don't expect these micro-jets to be much of threat there either.

19 posted on 09/06/2002 11:43:32 AM PDT by StolarStorm
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To: Joe Bonforte
You're correct about these being the most profitable passengers. No doubt that the big boys will have to change their model a bit to be more like SouthWest, but many of them will survive. The pie may be shrinking a bit for the majors, but it looks like capacity is about to decline (U and United). International will also continue to be strong and that is a market segment that Southwest doesn't compete in... and I don't expect these micro-jets to be much of threat there either.

20 posted on 09/06/2002 11:49:01 AM PDT by StolarStorm
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To: HeadOn
It won't be 1 buck a mile once the FAA, OSHA, EPA, IRS, UNIONS, LAWYERS get done with it. What engineers create, Lawyers and bureaucrats destroy.
21 posted on 09/06/2002 11:52:51 AM PDT by StolarStorm
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To: StolarStorm
LOL!
22 posted on 09/06/2002 11:54:35 AM PDT by jjm2111
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To: Marie Antoinette
They won't pay you very much. Express jets and the like typically pay about 20,000 a year. I also think that the cost won't be anywhere near a dollar a mile. Right now, I think the investors are being yanked a bit with fake estimates.
23 posted on 09/06/2002 11:55:30 AM PDT by StolarStorm
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To: LenS
He didn't say "Democrat Cruise Missiles"!
24 posted on 09/06/2002 11:59:33 AM PDT by Redleg Duke
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To: StolarStorm
If they go the "sky taxi" or time-sharing (NetJet) route, the per person price would be huge...

Not according to the projections I have seen. They predict a cost per seat about the same a full-fair coach. Operating costs are around 60 cents per mile.

I can forsee even the company I work for that is very tight with travel dollars using this as a taxi service. We often send 3 or 4 people (engineers, marketing, sales) to a customer plant site. These places are often out of the way forcing several valuable employees to blow an entire day in airports waiting for flights, making connections at another ariport and then renting a car for sometimes a 100 mile drive to the final destination. With one of these puppies, they can skip the big airports and fly point to point to within a few miles of the final destination arriving in a few hours instead of facing an entire day of travel. The same could be said of vacation travlers. If say they wanted to go from NYC to Myrtle Beach for a few days of golf, they could be there in a couple of hours instead of blowing a day of their vacation at LaGuardia and Atlanta wating for the puddle jumper. Even if the cost is 50% higher than regular air fair, the time savings would be well worth it for millions of people.

25 posted on 09/06/2002 12:03:52 PM PDT by Ditto
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To: Ditto
Operating cost aside (which I obviously don't buy), there is definitely a market for these things. However, the vast number of travelers aren't going to remote sites and thus this shouldn't destroy the primary model that the airlines work under. Perhaps it would make sense for the airlines to buy a number of these and use them for the smaller market areas and for some point to point travel.

I still don't see a big threat that corps are going to go into the airline business themselves in mass, but I can see the airlines using these jets to provide additional services.

26 posted on 09/06/2002 12:13:04 PM PDT by StolarStorm
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To: StolarStorm
I still don't see a big threat that corps are going to go into the airline business themselves in mass, but I can see the airlines using these jets to provide additional services.

We'll see what happens. But keep in mind, they already have a billion dollars in orders. An outfit in Switzerland has over 100 on order that they intend to lease out across Europe. Another start-up in Florida has 50 on order which they plan to use to cater to the tourist industy --- from Disney to Key West in an hour anyone? I think they'll make a lot of money.

27 posted on 09/06/2002 12:25:51 PM PDT by Ditto
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To: StolarStorm
LOL. You hit the nail on the head with that one.

Here's a quote that's original with me: "Almost everything stupid we have to do can be traced back to lawyers or the tax code."

28 posted on 09/06/2002 12:59:29 PM PDT by HeadOn
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To: StolarStorm
I also think that the cost won't be anywhere near a dollar a mile. Right now, I think the investors are being yanked a bit with fake estimates.

Why do you "think" that? Is it just a hunch or do you have something to lead you to that conclusion? You know, people in the private sector can go to jail for 'fooling' investors. (But it is ok for politicians to do that ;`( It's really a serious charge.

29 posted on 09/06/2002 1:51:48 PM PDT by Ditto
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To: Ditto
Another item that might be worth keeping in mind is the air cargo market. I don't think that FedEx is immediately at risk(and in fact,I'll bet that FedEx has at least one of these on order,for evaluation purposes,if nothing else),but I can see where a point-to-point hotshot service for small freight loads of high value items could be profitable.
30 posted on 09/06/2002 2:01:51 PM PDT by sawsalimb
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To: sawsalimb
Something to think about.
31 posted on 09/06/2002 2:24:37 PM PDT by Ditto
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To: jjm2111
Every rich individual that flys a twin or an upscale single prop will want one of these instead.
32 posted on 09/06/2002 5:32:01 PM PDT by eno_
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To: Marie Antoinette; HeadOn
You just got me to thinking about another possible market-the college kid market. Think about it:

A lot of pretty big schools are in pretty out of the way places. A good example would be Texas A&M University,in College Station,or Baylor,in Waco. Both towns are pretty good sized,but not big enough to have a full blown airport,so as the situation stands right now,someone attending college from out of state can't fly home without jumping through some hoops.

Given an aircraft that's cheap enough to operate,flying home for Christmas break and spring break might be a viable option. Or,just start a charter service to popular college kid destinations-Padre Island comes to mind,and maybe even a few of the state parks.

33 posted on 09/06/2002 8:31:27 PM PDT by sawsalimb
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To: Ditto
How many people can these things carry? I'm thinking that big aircraft allow you to make do with fewer, highly trained pilots. A fleet of smaller ones would require more pilots, hence higher labor costs, and the risk of less skilled pilots as companies try fill more positions and cut corners. Is this right? Also, with more planes in the air would the cost of keeping planes from hitting into each other increase? And are small planes more dangerous than large ones? Or more likely to be grounded by the weather?

It's not quite the same as the Model T, either. It's not like families would actually own one. It might well put some of the big airlines that are still running out of business if the price of a ticket is the same or lower for the new jet. If it's higher, you'll have that kind of class resentment that early, pre-Model T autos stimulated in those who couldn't afford them. Could it be that trains and busses would be more hurt?

34 posted on 09/06/2002 8:51:21 PM PDT by x
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To: x
I doubt that air traffic control costs would rise very much. The projected use of these little jets is from one small airport to another small airport,with the whole idea being to bypass the big crowded hubs,at least to the extent possible.

A good example would be the town I live in-there's a fair sized general aviation field,but it isn't served by a major carrier. If I want to fly anywhere right now,I have to drive an hour to the nearest airport,catch a plane,and fly to DFW(I live just south of Austin). Then at DFW,I have to change planes to get on the one that's going closest to where I want to go. Then I have to go through the process in reverse to get back home.

If the model that the Eclipse people are hoping for works out,I'll be able to go to the local airport,hop on the small jet,and land a lot closer to where I want to go. Sounds like a plan to me.

35 posted on 09/06/2002 9:05:59 PM PDT by sawsalimb
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To: Ditto
Fun read. Thanks!
36 posted on 09/06/2002 10:16:32 PM PDT by patriciaruth
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To: StolarStorm
" What engineers create, Lawyers and bureaucrats destroy. "Well of course they do, they know nothing else, have 2nd homes and private schools they have to pay for. Other than using the power of the state, how else could they prosper, let alone survive? Do you suggest they do some low common work, Sir?
37 posted on 09/07/2002 12:38:32 AM PDT by Leisler
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To: x
How many people can these things carry?

It depends on the configuration but can take as much as 5 passengers + pilot.

Here are some shots of the 6-seat configuration.

It's not quite the same as the Model T, either. It's not like families would actually own one.

No it's not. At $800k each, it's not likely that it will be the Model T. Think of this thing as an air taxi. At 800k, small investors can afford to get into the air taxi business. There is a market for it but the cost of owning and operating small jets has just been too high in the past. The relatively low costs of this concept remove that barrier to entry.

As to pilots all I can say is that they will face the same FAA license rules that the airline pilots have. And for air space, there is plenty of room up there. The congestion comes from having 500-1000 flights a day trying to get in and out of the large hub airports. Too many planes trying to use the same amount of real-estate.

38 posted on 09/09/2002 7:47:26 AM PDT by Ditto
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