Comments on: DayJet: Why Falling Down is Part of Learning http://adamwebster.com/2008/05/21/dayjet-why-falling-down-is-part-of-learning/ Business advice from start ups to shut downs. Sun, 05 Feb 2012 05:38:16 +0000 http://wordpress.org/?v=2.3 By: Aviation Marketing Intelligence » Blog Archive » Dayjet & Wall Street: Falling Down 2.0 http://adamwebster.com/2008/05/21/dayjet-why-falling-down-is-part-of-learning/#comment-6432 Aviation Marketing Intelligence » Blog Archive » Dayjet & Wall Street: Falling Down 2.0 Thu, 02 Oct 2008 07:53:59 +0000 http://adamwebster.com/2008/05/21/dayjet-why-falling-down-is-part-of-learning/#comment-6432 [...] marketing department or your worst nightmare. In the case of Dayjet, we doubted the airplane, the viability of the model, etc., even though they appeared to be the strongest player amongst the air taxi [...] […] marketing department or your worst nightmare. In the case of Dayjet, we doubted the airplane, the viability of the model, etc., even though they appeared to be the strongest player amongst the air taxi […]

]]> By: adam http://adamwebster.com/2008/05/21/dayjet-why-falling-down-is-part-of-learning/#comment-5942 adam Wed, 04 Jun 2008 23:02:10 +0000 http://adamwebster.com/2008/05/21/dayjet-why-falling-down-is-part-of-learning/#comment-5942 Harold, Two brilliant things you've said: a) never spend more than you can afford to lose is, while conservative, a very appropriate way to look at risk managed launches b) re: the sadness.. don't despair.. DayJet may yet dump the airplane, salvage the "ant farming" and move forward.. they'll be a different animal, but even though the ship may sink.. at least the loss at sea will leave to improved safety, that's the theory right? Like you, we started our business with our own resources, and investors recognize that mentality. When you really worry about where each nickel goes (like Southwest does) but also balance that with the wisdom of marketing as a necessity, you can make real inroads. The problem with success and "the hockey stick" that every "VC type / private equity" investor looks for in the slope of a graph, is that the steeper the growth curve, the higher the risk... it is that simple. In my opinion.. a couple of planes.. and a few hundred customers would have been the way to go... but that is a hard sell to people who only want to give you $50MM or more. Harold,

Two brilliant things you’ve said:

a) never spend more than you can afford to lose is, while conservative, a very appropriate way to look at risk managed launches

b) re: the sadness.. don’t despair.. DayJet may yet dump the airplane, salvage the “ant farming” and move forward.. they’ll be a different animal, but even though the ship may sink.. at least the loss at sea will leave to improved safety, that’s the theory right?

Like you, we started our business with our own resources, and investors recognize that mentality. When you really worry about where each nickel goes (like Southwest does) but also balance that with the wisdom of marketing as a necessity, you can make real inroads.

The problem with success and “the hockey stick” that every “VC type / private equity” investor looks for in the slope of a graph, is that the steeper the growth curve, the higher the risk… it is that simple.

In my opinion.. a couple of planes.. and a few hundred customers would have been the way to go… but that is a hard sell to people who only want to give you $50MM or more.

]]> By: adam http://adamwebster.com/2008/05/21/dayjet-why-falling-down-is-part-of-learning/#comment-5941 adam Wed, 04 Jun 2008 22:42:55 +0000 http://adamwebster.com/2008/05/21/dayjet-why-falling-down-is-part-of-learning/#comment-5941 Roger, Your comment is spot on. The only caveat I'd chuck in is that fuel is not something that is ever a reason to lay people off. If customers could see fuel as a pure pass through, a separate line item on their quote / invoice, they would just pay it. It is critical to remember that in this space, people are not terribly price sensitive. Pricing must (at all times) reflect cost. Southwest gets that. Few others do. Regarding operations, yeah... you nailed it, I don't know what is happening, but that is simply "where the rubber meets the road." --Adam Roger,

Your comment is spot on. The only caveat I’d chuck in is that fuel is not something that is ever a reason to lay people off. If customers could see fuel as a pure pass through, a separate line item on their quote / invoice, they would just pay it. It is critical to remember that in this space, people are not terribly price sensitive. Pricing must (at all times) reflect cost. Southwest gets that. Few others do.

Regarding operations, yeah… you nailed it, I don’t know what is happening, but that is simply “where the rubber meets the road.”

–Adam

]]> By: adam http://adamwebster.com/2008/05/21/dayjet-why-falling-down-is-part-of-learning/#comment-5940 adam Wed, 04 Jun 2008 22:25:58 +0000 http://adamwebster.com/2008/05/21/dayjet-why-falling-down-is-part-of-learning/#comment-5940 Steve C., Your response is a tad over simplistic imho. They saw an big gap .. and went for it. Yes, the airplane was wrong. That's easy. But what Ed did in terms of investment on market research followed the key principle outlined by many experts, which is simple - they minimized risk by running simulations based on known factors. The mistake was the darn airplane.. which is so easy for anyone in the biz to see. And, I'll agree with your assessment of a "flawed plan" if 70 aircraft were seen as a "must" when 5 would have been plenty to tune the model. More of my snide commentary on the difficulty of this space here: http://iagblog.podomatic.com/entry/2008-05-22T10_13_50-07_00 Steve C.,

Your response is a tad over simplistic imho. They saw an big gap .. and went for it. Yes, the airplane was wrong. That’s easy. But what Ed did in terms of investment on market research followed the key principle outlined by many experts, which is simple - they minimized risk by running simulations based on known factors. The mistake was the darn airplane.. which is so easy for anyone in the biz to see.

And, I’ll agree with your assessment of a “flawed plan” if 70 aircraft were seen as a “must” when 5 would have been plenty to tune the model.

More of my snide commentary on the difficulty of this space here: http://iagblog.podomatic.com/entry/2008-05-22T10_13_50-07_00

]]> By: Adam http://adamwebster.com/2008/05/21/dayjet-why-falling-down-is-part-of-learning/#comment-5939 Adam Wed, 04 Jun 2008 22:19:48 +0000 http://adamwebster.com/2008/05/21/dayjet-why-falling-down-is-part-of-learning/#comment-5939 Paul, Your comment is valid, however, one thing is key for the small guys. Until you command the type of attention that Mr. Buffet commands, you need to be very aware of just how much investment and fine tuning goes into your lead generation, whether it is charter or managed aircraft. This link is the best way we could come up with anything to explain how you can avoid "not growing" / stalling / failing. It is risky, not for the "faint of wallet" but tried and true: http://www.rsvpair.com/static/landscape.jpg Take from http://adamwebster.com/2007/02/26/whyyouarenotnetjets/ Paul,
Your comment is valid, however, one thing is key for the small guys. Until you command the type of attention that Mr. Buffet commands, you need to be very aware of just how much investment and fine tuning goes into your lead generation, whether it is charter or managed aircraft.

This link is the best way we could come up with anything to explain how you can avoid “not growing” / stalling / failing. It is risky, not for the “faint of wallet” but tried and true: http://www.rsvpair.com/static/landscape.jpg

Take from http://adamwebster.com/2007/02/26/whyyouarenotnetjets/

]]> By: Adam http://adamwebster.com/2008/05/21/dayjet-why-falling-down-is-part-of-learning/#comment-5936 Adam Mon, 02 Jun 2008 17:39:11 +0000 http://adamwebster.com/2008/05/21/dayjet-why-falling-down-is-part-of-learning/#comment-5936 thanks Hugo.. indeed I remember your concept well.. the most important part you got (that Ed skipped) was the importance of low capital expenditures at the outset.. since your volume risk is unknown.. there is no point in nailing your own coffin with high fixed costs right out of the gate - this is counter intuitive to non-airplane folks since they don't understand that 5 or 10 year old aircraft are actually pretty good.. and in Dayjet's case.. well they would have been better.. and the marketing wizards can always figure out how to cajole "the new flyer" into the King Air 350, Pilatus, etc. thanks Hugo.. indeed I remember your concept well.. the most important part you got (that Ed skipped) was the importance of low capital expenditures at the outset.. since your volume risk is unknown.. there is no point in nailing your own coffin with high fixed costs right out of the gate - this is counter intuitive to non-airplane folks since they don’t understand that 5 or 10 year old aircraft are actually pretty good.. and in Dayjet’s case.. well they would have been better.. and the marketing wizards can always figure out how to cajole “the new flyer” into the King Air 350, Pilatus, etc.

]]> By: Harold A. Coghlan http://adamwebster.com/2008/05/21/dayjet-why-falling-down-is-part-of-learning/#comment-5934 Harold A. Coghlan Thu, 22 May 2008 01:31:59 +0000 http://adamwebster.com/2008/05/21/dayjet-why-falling-down-is-part-of-learning/#comment-5934 Adam, I think we will see poor old Dayjet struggle until it perhaps is forced to change concepts, or closed down. I was hoping their idea would work (selfishly), because once they got it up and running, and made it popular, I felt a number of their passengers would begin to want more than a "toy jet" and would gravitate to other operators with bigger, more capable equipment, and that would benefit all of us. Nevertheless, I feel sad for Dayjet and for their people, as all of us have at one time or another been with a "sinking ship", and it's no fun at all. What's amazing is how much money they spent in flashy magazine ads, which are still being printed even as we speak, yet the company has been forced to lay off 1/3 of their people and ground about 1/3 to a 1/2 of their fleet. This reminds me of my airline days when the marketing dept. would decide to open a new city (or cities), then inform Ops about it, and we would struggle to fill the planes with crews, then after 3-6 months, the airline would pull out of same cities, while the glossy ads were still running announcing the "new service". Sadly I feel that the reality of too fast a growth, too much overhead, too much spending, etc, is catching up with our brothers at Dayjet. I for one, am sad to see their luck turn bad. Reminds one of the advice of "never spend more than you can afford to loose". See ya around the aerodrome! Adam,
I think we will see poor old Dayjet struggle until it perhaps is forced to change concepts, or closed down. I was hoping their idea would work (selfishly), because once they got it up and running, and made it popular, I felt a number of their passengers would begin to want more than a “toy jet” and would gravitate to other operators with bigger, more capable equipment, and that would benefit all of us.

Nevertheless, I feel sad for Dayjet and for their people, as all of us have at one time or another been with a “sinking ship”, and it’s no fun at all. What’s amazing is how much money they spent in flashy magazine ads, which are still being printed even as we speak, yet the company has been forced to lay off 1/3 of their people and ground about 1/3 to a 1/2 of their fleet. This reminds me of my airline days when the marketing dept. would decide to open a new city (or cities), then inform Ops about it, and we would struggle to fill the planes with crews, then after 3-6 months, the airline would pull out of same cities, while the glossy ads were still running announcing the “new service”.

Sadly I feel that the reality of too fast a growth, too much overhead, too much spending, etc, is catching up with our brothers at Dayjet. I for one, am sad to see their luck turn bad.

Reminds one of the advice of “never spend more than you can afford to loose”.

See ya around the aerodrome!

]]> By: Hugo http://adamwebster.com/2008/05/21/dayjet-why-falling-down-is-part-of-learning/#comment-5933 Hugo Wed, 21 May 2008 18:36:38 +0000 http://adamwebster.com/2008/05/21/dayjet-why-falling-down-is-part-of-learning/#comment-5933 Adam, Good article. You well know I played with the same concept way back when (as early as 2000), I never could raise the capital that Ed did, good for him for trying. After 27 years struggling to make money in the charter business, the words of my first instructor continue to resonate in my brain "If you want to make a million in this business, start with two". It is very difficult to make money in the charter business (or Air Taxi) particularly with the note on a $1.5 Mil airplane and $5 to $6 a gallon for JetA. As far as the Eclipse, I was at that same NBAA convention and in the same line as all us aviation nuts who wanted to be the first to get into an Eclipse, as a matter of fact I was right behind you. Once my turn came up, I realized that I forgot my shoe horn at home, and as expected had a bit of difficulty manuevering into the aircraft. Regardless, the air taxi concept is great, and will work for some, but I think more for the XO Jets of the business, who invested in real airplanes and go long distances with very little repositioning (or deadheading) as we like to call it. I applaud all the Air Taxi startups of this business and wish them luck and success, because it is their entrepeneural spirit that makes this business what it is. Hugo Adam,
Good article. You well know I played with the same concept way back when (as early as 2000), I never could raise the capital that Ed did, good for him for trying. After 27 years struggling to make money in the charter business, the words of my first instructor continue to resonate in my brain “If you want to make a million in this business, start with two”. It is very difficult to make money in the charter business (or Air Taxi) particularly with the note on a $1.5 Mil airplane and $5 to $6 a gallon for JetA. As far as the Eclipse, I was at that same NBAA convention and in the same line as all us aviation nuts who wanted to be the first to get into an Eclipse, as a matter of fact I was right behind you. Once my turn came up, I realized that I forgot my shoe horn at home, and as expected had a bit of difficulty manuevering into the aircraft. Regardless, the air taxi concept is great, and will work for some, but I think more for the XO Jets of the business, who invested in real airplanes and go long distances with very little repositioning (or deadheading) as we like to call it. I applaud all the Air Taxi startups of this business and wish them luck and success, because it is their entrepeneural spirit that makes this business what it is.
Hugo

]]> By: Roger Humiston http://adamwebster.com/2008/05/21/dayjet-why-falling-down-is-part-of-learning/#comment-5932 Roger Humiston Wed, 21 May 2008 16:45:35 +0000 http://adamwebster.com/2008/05/21/dayjet-why-falling-down-is-part-of-learning/#comment-5932 I enjoyed your article. You touched on many facets of aviation that are revelant to our times and the Aviation Industry as a whole. As smart a guy as Ed Iacobucci is, and as much money as he had to run this grand experiment, I doubt that he or anyone else could have imagined that oil would go to $130.00/barrel. The success of a new or old business is dependent upon many factors. Usually businesses can withstand pressures from several directions at a time, but I believe the cost of fuel in this country has reached a point where food stamps won't feed poor families any longer to mega compaines being put to their knees over transportation costs. The airlines as we know them may not exist in a year or two. We will have to wonder how Ed's concept would have been received in better economic times. I also believe that VLJ hype will turn out to be just that. They are all certified under FAR Pt 23 which makes no more strutural or performance guarantees that you get with a Baron or 310. With all engines running at full power you have to clear a 50" obstacle at the end of the runway. When you lose 50% of power you lose more than 100% of performance. The VLJ marketing people have been very skillful at avoiding the ABC's of safe flight while keeping jet pilot wantabes intoxicated over the though of being a jet pilot. Having been a charter pilot all my life, (Beech 18s to GIVs) I never believed that you would get people who didn't know each other to sit in such close proximity with with their luggage on there laps. I personally was intrigued with Dayjets route sturcture. I will wonder in my mind if people would have been more receptive to the concept if they could walk out to a King Air 200 or something like a King Air with more interior room and more ramp appeal. My last comment is that no matter how clever you are with computers, the day comes when you have to be an expert at "Operations". This means dealing with pilots, weather, maintenance, training, FAA, customer service, etc, etc. etc. I think this area may have been more than Dayjet bargined for, and I don't mean that in a degrading way. Operations, is the day of reckoning for any aviation company. Again, I enjoyed your article and I don't want to come off sounding like a Monday morning quarterback. We are all living in interesting and trying times and I admire the doer of deeds sucessful or not. I enjoyed your article. You touched on many facets of aviation that are revelant to our times and the Aviation Industry as a whole.

As smart a guy as Ed Iacobucci is, and as much money as he had to run this grand experiment, I doubt that he or anyone else could have imagined that oil would go to $130.00/barrel. The success of a new or old business is dependent upon many factors. Usually businesses can withstand pressures from several directions at a time, but I believe the cost of fuel in this country has reached a point where food stamps won’t feed poor families any longer to mega compaines being put to their knees over transportation costs. The airlines as we know them may not exist in a year or two. We will have to wonder how Ed’s concept would have been received in better economic times.

I also believe that VLJ hype will turn out to be just that. They are all certified under FAR Pt 23 which makes no more strutural or performance guarantees that you get with a Baron or 310. With all engines running at full power you have to clear a 50″ obstacle at the end of the runway. When you lose 50% of power you lose more than 100% of performance. The VLJ marketing people have been very skillful at avoiding the ABC’s of safe flight while keeping jet pilot wantabes intoxicated over the though of being a jet pilot.

Having been a charter pilot all my life, (Beech 18s to GIVs) I never believed that you would get people who didn’t know each other to sit in such close proximity with with their luggage on there laps. I personally was intrigued with Dayjets route sturcture. I will wonder in my mind if people would have been more receptive to the concept if they could walk out to a King Air 200 or something like a King Air with more interior room and more ramp appeal.

My last comment is that no matter how clever you are with computers, the day comes when you have to be an expert at “Operations”. This means dealing with pilots, weather, maintenance, training, FAA, customer service, etc, etc. etc. I think this area may have been more than Dayjet bargined for, and I don’t mean that in a degrading way. Operations, is the day of reckoning for any aviation company.

Again, I enjoyed your article and I don’t want to come off sounding like a Monday morning quarterback. We are all living in interesting and trying times and I admire the doer of deeds sucessful or not.

]]> By: Addison http://adamwebster.com/2008/05/21/dayjet-why-falling-down-is-part-of-learning/#comment-5931 Addison Wed, 21 May 2008 15:23:40 +0000 http://adamwebster.com/2008/05/21/dayjet-why-falling-down-is-part-of-learning/#comment-5931 Not to mention that by then end of 2008 only Southwest won't be bankrupt. The whole transport sector is being trashed by oil prices. If you got to fly, an expensive air taxi may be all thats left. Not to mention that by then end of 2008 only Southwest won’t be bankrupt. The whole transport sector is being trashed by oil prices.

If you got to fly, an expensive air taxi may be all thats left.

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