Eclipse 500

Neil Gould wrote:


That depends on how correct Eclipse is about the seat/mile costs. A full
E-500 has to be cheaper to fly in than a half-full Citation.


Sure it may be cheaper. But the charter market never has been a
price-sensitive market; that is why jet charters are much more popular
than piston charters.

This is a problem that affects all operations equally. If one can reduce
their capital expenses by a significant amount, that results in a higher
net profit, and I have a hard time seeing how that is a Bad Thing.

My point is that when capital is considered, there never has been such
a thing as a "profit" anywhere in the charter industry except in the
very high-end VIP market which sells ultra-security and ultra-privacy
without regard to cost.

The reason the charter market exists currently is that owners who
already own airplanes for other reasons choose to lease them back to
Part 135 operators. The owners make a profit on the leaseback but take
a loss overall; that is OK since the airplanes can be justified on
other grounds and the leaseback is just a bonus.

In other words, no one today can go out and buy a fleet of CitationJets
and make a profit chartering them; what happens is that someone who
already owns such an airplane for other reasons chooses to earn some
incremental money on a leaseback.

The model of hundreds or thousands of Eclipse air taxis takes a
different route and assumes that a charter leaseback can instead be
profitable if the planes are bought strictly for leaseback, i.e.
profitable considering both capital and operating costs. I propose
that if iswere shown to be true then the free market will take over so
many people would get into the air taxi business such that the charter
price gets pushed down and once again the capital cost is not recovered
in the price.

In simplest form, every pilot would love to own an Eclipse if he could
pay its ownership costs in full via a charter operation, no less make
money on the deal. This would be so good a deal that the free market
will ensure that it is not possible.

But the charter market never has been a
price-sensitive market; that is why jet
charters are much more popular
than piston charters.

Were that really true, charter prices would rise unimpeded (as charter
companies try to make more profit). But they don't. The bucks may be
there, but value is demanded for them. Charter =is= price sensitive.

The E-500 would provide as much value to the passenger as a Citation,
and either provides more value than a piston twin.

Jose
--
You may not get what you pay for, but you sure as hell pay for what you get.
for Email, make the obvious change in the address.

"Jose" wrote in message
. ..

Were that really true, charter prices would rise unimpeded (as charter
companies try to make more profit). But they don't. The bucks may be
there, but value is demanded for them. Charter =is= price sensitive.

Lack of price-sensitivity does not mean price is irrelevant for equivalent
services, i.e. the less expensive of two identical CitationJets with
equivalent crews will be preferred over the more expensive one.

What lack of price-sensitivity means is that the market is not so quick to
jump on a service which is a lot less money if the product is not perceived
of being at least as good in quality.

An Eclipse will require a compromise in payload and/or range vs. a
CitationJet. In some cases an Eclipse will also require a compromise in
lavatory facilities if that option is not chosen for a given plane or needs
to be sacrificed for a passenger seat.

To the extent a price-sensitive market exists and WOULD be interested in the
value an Eclipse offers, the question begs to be answered as to why that
market will embrace the Eclipse but not piston twins or even turboprop
twins. I think the answer is that in order to reach this price-sensitive
market, the price would need to be much, much less than will be possible
with Eclipse economics.

--------------------
Richard Kaplan

www.flyimc.com

What lack of price-sensitivity means is that the market is not so quick to
jump on a service which is a lot less money if the product is not perceived
of being at least as good in quality.

Yes, I agree that "a lot less money" presently buys "a lot less service"
and that's not what the market is. But when "a lot less money" buys "a
little less service", you'll find more takers. Some will come from the
piston twin regime, where now for "the same money" they can get "a lot
more service".

All this, of course, FSVO "a lot". That's the nut we're waiting to see
crack.

Jose
--
You may not get what you pay for, but you sure as hell pay for what you get.
for Email, make the obvious change in the address.