DayJet: Making Air Business Travel Accessible and Expedient

Esther Dyson is an investor in companies including 23andMe, Eventful.com, Meetup Inc., WPP Group and Zedo. She is the founder and co-host of FlightSchool.

I recently paid a visit to DayJet's headquarters in Boca Raton to chat with Ed Iacobucci, the company’s founder and CEO. He is going to be a speaker at the Flight School 08 workshop this June in Boulder, Colo. (The event is being co-hosted by myself and the Imaginova Corp, parent company of Aviation.com)

It was an enjoyable trip. DayJet is the first of a new breed of air-taxi companies changing how people travel to do business. (Full disclosure: I got a free sample of its services, and my experience made a good case for them.) I had just flown in from Germany, almost a 10-hour flight. My ride to the Opa-Locka general aviation airport — DayJet flies only from smaller airports — took about 35 minutes. My flight to Boca Raton took 20 minutes (including ATC vectoring that added five minutes). And my ride from the Boca Raton airport to my hotel took 5 minutes.

My experience illustrated what DayJet expected...and what is turning out to be true: The vast majority of its trips are replacing car trips, not air journeys — either commercial or charter. Had I not been able to use DayJet, I would have taken a taxi (I don’t drive) for a more-than-90-minute journey to Boca Raton.

The opposite of FedEx

I won’t explain the whole DayJet concept here, but let’s just say it reminds me of Federal Express — even though its premise is precisely the opposite.

Way back in the mid-70s when FedEx started, it created an entirely new concept. Packages don’t care where they go on the way to their destination, so FedEx would send them all through Memphis — no exceptions. Manhattan to Brooklyn? Through Memphis. Even Manhattan-to-Manhattan went through Memphis, though that has changed since.

The reasoning was that the costs and glitches of complexity outweighed those of transportation, so the FedEx hub concept would create a reliable, routine service — one that revolutionized the courier-service industry and created the overnight-delivery business.

DayJet’s premise is the opposite: People do care where they go, and the costs of complexity are way down given today’s computer systems and software. So former software executive Iacobucci created a company where there is no routine. Every trip is an exception, scheduled for specific passengers ... but scheduled by computers, not by people.

It’s no surprise this comes from the man who created the Citrix operating system, which is software for allocating scarce computer resources in real time. DayJet allocates scarce aircraft and crew resources in near-real time. You can find out more at http://www.DayJet.com.

But just as the courier-service people didn’t quite understand the point of FedEx, so today’s charter operators do not understand the implications of DayJet.

New markets, new metrics

“We’ve had to create new performance indicators,” said Iacobucci. “Our load factor right now is about 1.5 (of 3 seats on a plane). But our effective load factor is lower, because we often fly people extra miles to get them where they are going — and they pay only for the originally requested mileage. On the other hand, the company does very well when it fills all three seats — and as it scales up that becomes easier and easier.”

Another metric is “quality of load,” which is determined by the customers’ time windows: Did customers book within a broad time window, spending less money, or did they demand tighter scheduling and receive it?

For example, consider two particular flights, from A to B and from B to C. Both have two passengers, so the apparent load factor is two-thirds, or 66.7 percent. But in reality there are three passengers, one going from A to B, one from B to C, and the third from A to C, so the effective load factor is three trip/seats out of six available, or 50 percent. The quality of load is even tougher to calculate, because it depends on the specifics of customers’ time windows and distances flown rather than the number of flight segments.

Overall, said Iacobucci, the company is pretty much tracking expectations after a late start last October, which mostly was due to late delivery of its aircraft.

One specific surprise has been that Tallahassee is so popular as a destination — a triumph of viral marketing among people in a community that revolves around the state government.

Training the customers

Another surprise is simply the time it takes for people to understand the service. (I remember the early FedEx commercials. First they explained the service. Then they focused on how even small businesses and normal people could use FedEx.)

DayJet has the benefit of the Web, so that consumers can get price quotes for themselves and experience, even if at first they don’t understand the trade-offs.

For starters, you don’t get a discount for booking in advance. Since the schedules are fixed only the night before each day’s flights, being early doesn’t help. Unlike most charter operators, DayJet owns its own aircraft, so it doesn’t have to allocate aircraft early or juggle them late in response to a private aircraft owner’s whims.

Instead, you can get a better price by stating a bigger time window: “I want to leave after 10 a.m. and arrive before 3 p.m.,“ versus “I want to leave at 10 a.m. and get there by 11 a.m.“ The first example is priced on the assumption that the plane's capacity can be shared with at least one other passenger, while the second in essence pays for the whole plane. Over time, pricing will be adjusted in response to demand, capacity, competition and other factors. But it’s the essence of the DayJet per-seat concept.

You can also pay extra to be guaranteed a nonstop flight. “Every constraint has a cost,” said Iacobucci. “And every loosening of a constraint (such as a broad time window) makes things cheaper.”

Watching customers learn

So people are beginning to learn how it works ... and Iacobucci can watch that happening through his software, which has one of the greatest sets of data and visualizations I have ever seen.

New customers’ initial queries are widely off the mark: They enter constraints that result in too-high prices, or they look for low prices and find flight times that don’t suit them. But, over time, each customer tends to make fewer queries before booking, and the initial pricing is closer to what the customer ends up paying. And experienced customers don’t book in advance.

Perhaps the most interesting thing is the metric that indicates how people value their time — which one NASA study estimated at $34 an hour for a generic business traveler. You can determine it, of course, by how much extra people will pay to save an hour of time. Even for any one person that will vary over a day and across days.

Of course, DayJet’s customer base is hardly average — and we’re talking mostly about people spending their employers’ money, not their own. The day I was there I saw figures ranging from $12 an hour to $300.

How is it trending? If people become more productive through DayJet, over time they may be willing to pay more for the service. And indeed, said Iacobucci, “We’re seeing that the estimated value of time is higher for repeat customers.”

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