Marketing Very Light Jets in a Turbulent Economy Clare L. Comm Professor, Marketing University of Massachusetts Lowell

2. CLC AGIFORS 2008, 2 Presentation Outline VLJ Background What are VLJs? Advantages and Disadvantages Competitors Target Market Marketing VLJ Air Taxis Controllable Variables: the seven �Ps� Diffusion Process Change Management Challenges Closing the Delivery Gap

3. CLC AGIFORS 2008, 3 Very Light Jets (VLJs) Weigh less than 10,000 lbs (4540 kgs) Seat 3 to 6 people 1-2 jet engines Cruise at 340-420 knots Operate from short airstrips (3000 ft / 900 m) Range of 1100 � 2000 nm Single pilot operation Cost $1million to $3 million (Boehmer 2006)

4. CLC AGIFORS 2008, 4 Very Light Jets (VLJs)

5. CLC AGIFORS 2008, 5 Advantages: Inexpensive to buy and operate Offers on demand point-to-point service Utilizes regional airports More productive use of consumer time Disadvantages: Strain on a congested aviation system Impacts regional airports and the environment Higher fares than commercial airlines Possible government user fees and surcharges Weather problems in certain areas On-demand scheduling is difficult

6. CLC AGIFORS 2008, 6 Environmental Impact on Regional Airports 70% of domestic commercial air traffic is concentrated at 30 major hub airports (Sharkey 2008) Over 5,300 regional public-use airports and 19,000 airstrips in the U.S. (Department of Transportation) 85% of the U.S. population lives within 30 minutes of regional airports (Craver 2006) As many as 16,000 people per day fly out of the regional airports (Loyalka 2005) VLJs use more fuel per person High carbon output per passenger mile

7. CLC AGIFORS 2008, 7 DayJet (www.dayjet.com) Currently operating Eclipse in the Southeast EarthJet (www.earthjet.com) Eclipse operations planned for East Coast ImagineAir (www.flyimagineair.com) Currently operating Eclipse in the Southeast JetSet (www.jetsetfractions.com) Eclipse Training flights in Orlando LinearAir (www.linearair.com) Currently operating Eclipse in the Northeast MagnumJet (www.magnumjet.com) Adam and Embraer operations planned Pogo (www.flypogo.com) Eclipse operations planned 2009 Point2Point (www.flyp2p.com) Currently operating charters in the U.S. SATSAir (www.satsair.com) Cirrus The-Jet planned for Southeast Yellow Air Taxi (www.flyyellowairtaxi.com) Currently operating Cessna in Southeast Source: www.very-light-jet.com U.S. VLJ Air Taxi Competitors

8. CLC AGIFORS 2008, 8 International VLJ Air Taxi Competitors

9. CLC AGIFORS 2008, 9 Target Market: Likely Users of VLJs

10. CLC AGIFORS 2008, 10 Product/Service: Direct, on-demand, �air taxi� flight, to and from small airports, similar to �dial-a-ride�. Schedule is dictated by the customer, not the airline. Place: Current focus on Southeast U.S. Price: Comparable to full coach or first class fare on a scheduled airline - opportunity cost. Promotion: To date, limited to publicity in newspapers, web sites, and trade publications for service in North America. Physical Evidence: Small planes, comfort, design. People: Pilots, reservation personnel who come into contact with the passenger. Process: Eliminates or reduces delays, cancellations, and security screening. Marketing: 7 �Ps�

11. CLC AGIFORS 2008, 11 Marketing: The Diffusion Process Background OC-ALC MRO Mission Program Objective Acquisition Strategy Toby Kaiser Market Research PWS Requirements Risk Assessment Acquisition Approach Source Selection Team Evaluation Criteria Funding Profile Contract, Sandra Geib Contract Type CLIN Structure Post Award Management Incentives Special Delegations/Waivers Summary Background OC-ALC MRO Mission Program Objective Acquisition Strategy Toby Kaiser Market Research PWS Requirements Risk Assessment Acquisition Approach Source Selection Team Evaluation Criteria Funding Profile Contract, Sandra Geib Contract Type CLIN Structure Post Award Management Incentives Special Delegations/Waivers Summary

12. CLC AGIFORS 2008, 12 1. Creating a sense of urgency - need or want to use VLJ, advantages 2. Coordinating the guiding team - new behavior, new process, new target market 3. Developing the change vision and strategy - benchmark 4. Communicating the change vision - 2 way: text messaging, trade publications, newspaper ads 5. Empowering employees for action - involve stakeholders 6. Producing short-term wins - advantages 7. Generating more change - internal and external factors 8. Creating a new culture - behavior change Source: Kotter�s Eight-Step Process for Successful Change (2005) Change Management

13. CLC AGIFORS 2008, 13 Challenges for VLJs Designing and testing this new service Communicating and maintaining a consistent image Motivating and sustaining employee commitment Coordinating marketing, operations, and human resource efforts Setting prices Finding a balance between standardization versus personalization Ensuring the delivery of consistent quality Balancing capacity constraints (time, labor, equipment and facilities) with demand patterns Scheduling

14. CLC AGIFORS 2008, 14 Closing the Delivery Gap Despite a hypercompetitive environment, Midwest Airlines proved that small, regional carriers can succeed and even set new standards. Despite a hypercompetitive environment, Midwest Airlines proved that small, regional carriers can succeed and even set new standards.

15. CLC AGIFORS 2008, 15 References Assael, Henry. 1987. Consumer Behavior and Marketing Action. Kent Publishing Company, Boston. Boehmer, Jay. 2006 (October). �Very Light Jets Preparing for Takeoff in the U.S.� Business Travel News. Craver, Martha Lynn. 2006 (February 20). �Air Taxis on the Way to Reality.� Kiplinger Business Forecasts. Kotter, John & Rathgeber, Holger. 2005. Our Iceberg is Melting. St. Martin�s Press. New York, NY. Loyalka, Michelle Dammon. 2005 (September 19). �Your Air Taxi is Almost Ready.� Business Week. Rogers, E. M. & Shoemaker, F. F. 1971. Communication of Innovations: A Cross-Cultural Approach. Free Press. New York, NY. Sharkey, Joe. 2008 (May 20). �Air Taxis Fly Into Financial Turbulence.� New York Times.