Investment Guru Questions The Economics Of Electric 19-Seaters

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TFF

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19 seat was uneconomical in the late 90s when I was working on Jetstreams. Those planes might have held a million dollar value on the books, but when they got rid of them, almost everyone went to the junkyard to be scrapped. When we got 50 seaters, they were deemed uneconomical and too small, but it was as big as regionals were allowed to have. Without kickbacks all the small planes don’t make money.
 

Mad MAC

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Economics would be way down my list of my red flags for this out fit (very few small airplane guys, let alone experience with certification in CS23).

19 seat was uneconomical in the late 90s when I was working on Jetstreams. Those planes might have held a million dollar value on the books, but when they got rid of them, almost everyone went to the junkyard to be scrapped. When we got 50 seaters, they were deemed uneconomical and too small, but it was as big as regionals were allowed to have. Without kickbacks all the small planes don’t make money.
Done well, 19 seaters can break even or be slightly profitable but you can't do stupid things like run maintenance deficits or have large convoluted corporate structure. Batterys are pretty good cost wise in that they have a fixed price at the start of operations, so have a fixed life cost unlike fuel which no one knows how much it will cost next 5 years etc.

Any one seen a decent cost break down for 19 seat ops we can all look at.
 

TFF

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And you expect an airline to put this together? Price per seat mile is what the system pays. Small cities would also put money in the kitty if they were low volume stops. The electric would need other government kickbacks and the airline would be banking on it. Watching the management work , airlines are run like a ponzi scheme. Margins are small and deals made are about putting off payments as long as possible. Today the profit comes from their name on credit cards not the actual service. It’s too bad that’s not against the law.
 

Rhino

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...you can't do stupid things like run maintenance deficits or have large convoluted corporate structure...
Well that leaves out the airlines.

This got me from the article:

...TMF also notes the impending pilot shortage as an economic challenge for regional carriers...
Ya think? And with the recent FAA acts to the detriment of training, it's only going to get worse.
 

Mad MAC

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On a EAS route that is subsidized by the gov., maybe.
Air New Zealand did it without subsidy, ran it as a stand alone company with own AOC etc, made about $1 a seat per sector (17 airframes, 8 sectors each day each). They ran it very divorced from the jet fleet as many of the skill sets didn't cross over well (Their interal design office struggled with GA style airframe repairs so that got subbed out, etc)
Worked well till they got a rising star CEO who decided the maintenance cost were too high and traded down the staff quality and oops, up went the operating costs. It was a few years ago.
 

12notes

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There are a lot of short haul routes out there with demand but no flights. For example, the Rockford, Illinois airport lists 5 locations in Florida, plus Las Vegas, and Phoenix as the only destinations. If you live in Rockford, IL, and want to go to most places, you'll probably need to get a flight from O'Hare. It's a 60 mile drive that takes 1 hour if you happen to drive when there is no traffic, but can be much longer. There is no train service, and it's a 3 hour bus ride. Parking under any sort of cover at O'Hare will cost $22/day, $42 if you want to park anywhere near the terminal, vs $7/day at Rockford, with valet parking for $10/day. Or you could taxi/Uber to Rockford Airport and not pay parking. A week long trip and a $300 round trip flight can start to make financial sense in parking fees alone. That's not even including the time savings - Driving, more driving time if there's traffic, parking (with a possible shuttle bus), going through security in O'Hare, all take more time. It's too expensive for the budget flyer, and while demand might be low for a $300 flight, Rockford has roughly 150,000 people living there, there's probably enough with the money to fill a couple of 19 seat planes a day.

If you draw a 60 mile circle around United's hubs (LA, Newark, Houston, etc), there are a lot of small cities in similar circumstances. Even more if you increase the circle to the 250 mile range of the plane in question.

Can they make money on $2850 ($150 each way per seat) revenue per 20 minute flight? I've no idea, but it seems reasonably possible with very low (not zero, electricity isn't free) fuel costs. With a flight this short, the recharge time isn't likely to be longer than the normal turnaround time for a standard flight. And they could run a lot of these flights in a day to various small cities in the area. Battery replacement costs are a concern, you would need a lot more details to estimate it, but battery prices have been decreasing (by 88% per kWh in the last 10 years) and production capacity is increasing rapidly, usually good signs.

With swapable batteries, and with a conservative estimate gain in energy density/kg per year (batteries have increased density between 3-5% per year since the 1950s), every 10 years they can increase range 35%-62%. So in 2036, the airframe could be upgraded to a roughly 350 mile range, 400 if you're optimistic. 2046 should increase range to 450-663 miles. These numbers are not dependent on any groudbreaking new technology, but the slow, steady plod of industrial development. The only real optimism required is that the FAA will have actually created a legal way to swap batteries in a lightning quick (for them) 15 years.

United has made a small (to them) investment, and effectively committed to nothing, since the purchases only take place “once the aircraft meet United’s safety, business, and operating requirements.” All investment is essentially gambling, it might not be a good one for me and you, but this one seems like a fairly decent bet for United.
 

Riggerrob

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Dear 12notes,
You make a goof point about driving versus flying times in the American Mid-West and Great Plains. But ground travel times are vastly different in mountainous or island terrain.
Harbour Air flew their first Electric Beaver in December 2019 and plan to fly electric airplanes on short hops between Vancouver Harbour, Vancouver International Airport, Victoria Harbour and Nanaimo Harbour. Their s=closest competitor is Heli-Jet which has the advantage of flying in foul weather (IFR) but considerably more expensive.
The third alternative is 3 to 5 hours by car and ferry boat.
Bottom line, electric 19-seaters may not be profitable in the American Great Plains, but people are willing to pay more for short hops between mountain valleys and islands.
 

Turd Ferguson

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There are a lot of short haul routes out there with demand but no flights. For example, the Rockford, Illinois airport lists 5 locations in Florida, plus Las Vegas, and Phoenix as the only destinations. If you live in Rockford, IL,
The reason there are no flights out of Rockford (other than ultra-low cost carrier cherry picking) is because of no demand. This is constantly studied by PHD's at airlines as they are regularly evaluating/forecasting market demand. At one time ~15 yrs ago our airline made flights to RFD. I've done them - I've over-nighted in Rockford. (Rockford is where from the terminal you could walk literally next door to the FBO and choose a cool ice cream treat from the cooler - no charge). That city was dropped because PHD's said poor loads which translates to poor profits.

United has zero intention of operating a 19 seat propeller airplane. The pilot's union will poo-poo that in a heartbeat. That means the airline will have to work a deal with a regional carrier to operate them under the United banner. Whole nuther can of worms. More like it's just hype to keep the United brand on the front page of conversation. Like supersonic jets.
 

Victor Bravo

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More like it's just hype to keep the United brand on the front page of conversation. Like supersonic jets.
And theeeeere you have it. The secret ingredient that makes all this stuff (which otherwise doesn't add up) finally make sense. PR, visibility, news coverage, and "brochuremanship". Add in some big tax benefit for tree-hugging or "progress" and you have a great big three layer cake.

But it's not a pretty girl that eventually pops out of the cake, it's an ugly accountant.
 

Mad MAC

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There are a lot of short haul routes out there with demand but no flights.
Really short routes tend to be expensive operate, due to the number of cycles (gear, fuse, engine and wings), amount of time spent climbing for flight length,etc. Some of this can be made to go away with heavier airframes, non pressized fuse, fixed gear, electric engines*, rotating aircraft around routes to balance cycles / hours. But after all that you are still going to spend more time at the airport than flying and seems to be the bit that kills these routes unless the alternative is multiple hours.

*yes some turboprops are not cycle limited, well until the first hot start & this assumes that electric engines / batteries won't be cycle limited which is an unknown.


Yip it appears plenty of the "investment" in electric vtol and electric aircraft seems to be marketing.
 

12notes

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The reason there are no flights out of Rockford (other than ultra-low cost carrier cherry picking) is because of no demand. This is constantly studied by PHD's at airlines as they are regularly evaluating/forecasting market demand. At one time ~15 yrs ago our airline made flights to RFD. I've done them - I've over-nighted in Rockford. (Rockford is where from the terminal you could walk literally next door to the FBO and choose a cool ice cream treat from the cooler - no charge). That city was dropped because PHD's said poor loads which translates to poor profits.

United has zero intention of operating a 19 seat propeller airplane. The pilot's union will poo-poo that in a heartbeat. That means the airline will have to work a deal with a regional carrier to operate them under the United banner. Whole nuther can of worms. More like it's just hype to keep the United brand on the front page of conversation. Like supersonic jets.
You flew about a 19 seat airplane from RFD to ORD? Because I'm guessing you flew a much larger jet on a much longer route, which would not even be close to the same situation as I was describing from a demand, loading, or profit standpoint. The only reason I mentioned the small number of flights from RFD was to show that to fly nearly anywhere from there involves driving to ORD. And it was a small city picked nearly at random, there are dozens like it within a short hop of United hubs.

United is an airline. They have PhDs too. Electric planes are not going to have the range to replace even regional jets for several decades, but there is a niche for short hop electric aircraft.
 

trimtab

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An accountant friend of mine once opined that business charter travel was a lot more profitable than airline travel for large portions of economic cycles.

Perhaps this fits in that model...a lot of bizjet travel is short haul.
 

tspear

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The reason there are no flights out of Rockford (other than ultra-low cost carrier cherry picking) is because of no demand. This is constantly studied by PHD's at airlines as they are regularly evaluating/forecasting market demand. At one time ~15 yrs ago our airline made flights to RFD. I've done them - I've over-nighted in Rockford. (Rockford is where from the terminal you could walk literally next door to the FBO and choose a cool ice cream treat from the cooler - no charge). That city was dropped because PHD's said poor loads which translates to poor profits.

United has zero intention of operating a 19 seat propeller airplane. The pilot's union will poo-poo that in a heartbeat. That means the airline will have to work a deal with a regional carrier to operate them under the United banner. Whole nuther can of worms. More like it's just hype to keep the United brand on the front page of conversation. Like supersonic jets.
The reason there are limited Jet airliner flights in many of these cities is because the companies are culturally unable to operate there.
There is a reason Cape Air (now over 35 locations and 100 planes with only a few "water bound") and Harbor Air among others continue to thrive and grow. The companies logistics, culture, structure everything is geared around smaller airports and running small planes. These companies would probably suck at running jets.

You will notice most of these small companies all tend to use piston powered planes, not turbines. There is a reason, turbines are just not suited to the market.

Tim
 

blane.c

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Freight, mail, and newspapers supplemented small air operations historically. The interstate highway system and the internet have cut deeply into much of that revenue stream for aviation and to some extent maritime as well. Additionally FAA likes the freight in front of the passengers if you are carrying both and this conflicts with passengers preferring to be more forward in the aircraft generally and especially not liking being "second class" to the freight, also the crew needs access past the freight to the passengers requiring a 'hallway" through the freight. This discourages hauling freight and passengers together compromising a income stream.
 
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