I'm always amazed by the clarity of vision of my old boss, Robert Crandall. The following news item appeared in Aviation Week, April 16 written by William Garvey. Note that Bob Crandall lists two issues above all - an airplane that couldn't; financing that dried up. There were many other issues but note the clarity of purpose in his remarks. Now - there is some very encouraging news in his comments. We are going to see a lot of alternative models emerge in aviation.
What I find interesting is that for the past thirty years, there has not been much change. Technology has marched on - the A380 is a sea change from the 707/VC10 era. However, the only fundamental change in the airline model in this timeframe is Southwest (and Ryan, easyJet, GOL etc). Business aviation remains the same, private aviation has seen little change. So how can Crandall claim there will be a lot of alternative models?
I believe the answer lies in two areas. (1) flights scheduled by travel companies that aggregate demand in realtime and 'charter' aircraft fit for the specific need and (2) clubs that blend the private jet industry with flexible demand to offer prices closer to the budgets of the middle class. Both of these offer real change (and many model options). Both of these are in the embryo stage and are being tried.
Item (2) was discussed in another aviation blog recently: http://www.linkedin.com/groupAnswers?viewQuestionAndAnswers=&gid=1571937&sik=1239883736371&discussionID=2566051&readyToAnswer=readyToAnswer&trk=ug_qa_usrcomm&goback=%2Eana_1571937_1239883736371_3_1
One thing I have learned well, whether you agree with Bob Crandall on a specific issue or not - never, ever discount his thoughts and predictions.
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The News Item:
After devoting several years to market analysis, equipment evaluation, pricing structures, service areas and operational planning, Robert Crandall has decided to ground Pogo, his start up very light jet charter operation, before it ever left the ground. He says he's returning what remains of the operation's seed money to investors.
"I feel badly about it," he said April 15 of the decision. "It's just one of those ideas that didn't work out."
Although Pogo was usually described as an "air taxi," Crandall dismissed that label, saying, "I don't know what that means." Rather, he described the intended service as a typical FAR135 charter operation using small jets with trips confined to the northeastern United States. The group had considered several jets, but seemed finally to settle on the Eclipse 500, primarily for its low acquisition and operating costs. However, Eclipse declared bankruptcy earlier this year after delivering fewer than 300 aircraft.
"Two things did us in," Crandall said. "First, the airplane never got built, and in fact the company went bankrupt. The aircraft still can't operate in icing conditions. So the airplane failed. And while we could conceivably use alternate airplanes, that wouldn't have provided as great a price advantage versus existing alternatives. And secondly, you can't finance anything new these days, especially in aviation."
He estimated a need for $80 million for Pogo to begin operations and said he was in New York pursuing financing the day Bear Stearns failed - "Nice timing," he noted.
Even though he is exiting the market, the former American Airlines chief predicted, "You're going to see a lot of alternative models emerge in aviation" because with the continuing contraction of airline service, "it's getting harder and harder to go from Point A to B in the United States."
"There is a market out there for alterative models that will save people time," he said, but added he's unlikely to be the provider. "My guess is it's going to take quite a long time for the market to recover. If it takes ten years, I'll be 83. So maybe I'd try again, but that's beginning to push the envelope."
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