LEXINGTON, MA — At the National Business Aviation Association (NBAA) annual meeting in Orlando last year, Linear Air, a charter company with its corporate office here, made the announcement that it had reached an agreement with Eclipse Aviation to purchase 30 Eclipse 500 jets over the first 24 months of production — 15 firm orders; 15 options. William Herp, president and CEO of Linear Air, says the operator's first delivery position is serial #52, expected to be delivered by the end of 2006, depending on Eclipse receiving final FAA certification (expected in the next month). Looking ahead, Herp says his business model calls for 300 aircraft in service by the end of 2010, some 280 which would be very light jets.
Linear Air received its Part 135 Certificate and began operating in August 2004, flying the Cessna Grand Caravan from Hanscom Field in Bedford, MA to Martha's Vineyard, and then expanding to business charter and private/leisure charter. Even though it was some two years before the release of the first Eclipse 500 jet, Herp understood the importance of establishing a proven business model as well as a name and reputation in the competitive charter industry.
Establishing a Model
Herp, a private pilot and founder of e-Dialog, an online marketing technology company, says he began thinking about this business opportunity in the late 1990s when very light jets (VLJs) were first announced. At e-Dialog, Herp says the company frequently was sending teams of two to four employees to visit with clients or perspective clients, paying full coach fares for last-minute tickets. "I realized if the economics of this new class of jet cuts the cost of flying privately in half, as they're talking about it, that's going to put it pretty close to the cost of full coach fares that we're paying when we send two or four people around on these short trips,"he says.
Herp partnered with Michael Goulian, whose family owns Executive Flyers Aviation, a flight training facility based at Hanscom Field, to develop a business model which Herp says will allow Linear Air to be successful operating a fleet of very light jets in an air taxi operation. "We said what we need to do is to see if there is a way for us to create a business model now which closely resembles what we think the business model will be in the future, once the new aircraft are in the marketplace."Linear Air created a business model based around the Cessna Caravan turboprop, which Herp calls a "good proxy"for the economic model of the very light jets, particularly the Eclipse 500. "It costs about the same to buy, it costs about the same to fly, on a trip basis,"says Herp. The Caravan is slower than the Eclipse, adds Herp, but he believes there is a set of trip needs that can be filled by the Caravan, and the customers the charter operator attracts now could be transitioned into flying on the Eclipse.
In order to get the business off and running, Herp was successful in raising $1 million in initial start-up capital from private individuals. Linear Air purchased a brand-new 2004 Cessna Grand Caravan with an executive interior for some $1.8 million. In the spring of 2005, the company began raising a second round of capital, which it used to add two additional Caravans to the fleet. And, in early 2006, it added a fourth Caravan and made the decision to base crew and two aircraft in the New York City region (White Plains) to meet the growing demand there.
Herp expects that the 30 VLJs Linear Air will have flying by mid-2008 will be spread over no more than five or six markets. "But it's possible that they might even be packed more densely into a couple of markets,"he adds. The next market Herp looks to enter is the Washington, D.C. area. Currently, in addition to private charters, Linear Air operates seasonal scheduled service, by the seat, from Boston and New York City to Nantucket and Martha's Vineyard.
Nationally, business jets and turboprop planes carried 13 million passengers last year, up from 11 million in 2000 and 9.8 million in 1998.
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