Will air taxis fly? Once bitter rivals, Don Burr and Robert Crandall team up to challenge the private jet industry

Chief Executive, The, March, 2005 by Justin Martin

Until very recently, it probably would not have been wise to seat these two men together on a cross-country flight. Don Burr is the founder of People Express, the celebrated but failed experiment in no-frills travel. Robert Crandall is the retired CEO of American Airlines. Back

in the 1980s, the pair engaged in a fierce rivalry for air supremacy. Now, they've forged an unexpected partnership around a new air taxi business called Pogo. Their start-up has the potential to challenge the airline establishment, but it also faces serious hurdles.

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In some ways, Burr and Crandall are a dream duo, possessed of skill sets that are remarkably complementary. For each, the new venture represents a fresh start, an opportunity to learn from past mistakes. But the pair also have strong--and quite different--personalities. "Based on their earlier careers, this certainly seems an unlikely collaboration," says Philip Baggaley, an airline analyst for Standard & Poor's.

If all goes as planned, Pogo will become the world's first air taxi service. It will offer a degree of flexibility, convenience and efficiency lacking in other air travel options, most notably flying with commercial carriers tethered to major airports through the hub-and-spoke system. According to a recent survey by NASA, commercial flights of less than 500 miles move at an average speed of less than 100 miles per hour. If you factor in all the common delays, such as sitting on the runway and waiting at the luggage carousel, you're actually not going much faster than a car.

Part of Pogo's plan is to take advantage of the 5,400 small airports sprinkled around the United States. You can avoid the hassles of Boston's Logan International Airport, for instance, by flying into Hanscom Field in suburban Bedford, Mass., or bypass LAX in favor of nearby Hawthorne Municipal Airport. To do so now, you would have several options: own a private jet, charter one, purchase a fractional share of an aircraft through a company such as NetJets, or participate in a membership program with an outfit such as Sentient Jet or Marquis Jet.

That's where Pogo comes in. Crandall and Burr are trying to carve out another option, far more flexible than the existing choices, akin to simply calling a car service. It would make it possible to book a highly customized itinerary on short notice--even the day of departure--that would allow you to avoid major airports or to fly directly between two smaller destinations, such as Brattleboro, Vt., and Lancaster, Pa. "Air travel isn't fun anymore," says Crandall. "But if you can leave from an airport closer to your home or office, cut the airport wait from two hours to 10 minutes, avoid being patted down by six different inspectors, then we'll have materially changed the experience."

Of course, such convenience comes at a cost. While Burr and Crandall are still working out the particulars of their pricing, a trip on Pogo will certainly cost more than a first-class ticket on a commercial carrier. At the same time, their business plan is based on undercutting the price of their various competitors. The pair believe they have identified a niche: high-earning business customers. According to Pogo's research, there are 3.8 million people in the U.S. who earn above $150,000 and fly more than five times a year. High productivity is expected from these highly paid individuals, so perhaps their companies will be willing to shoulder Pogo's premium in exchange for more efficient travel. After all, it's a waste of money to let a $200,000-a-year marketing VP sit in an airport all day. Meanwhile, Pogo could prove an efficient way for a team of three or four employees to make a series of business calls in different cities in a single day and still make it home for dinner. There's also the prospect of tapping the personal air travel market.

To succeed, Pogo doesn't exactly need to drive Continental or United out of business. Right now, Pogo's well-heeled target market takes 30 million trips a year that are shorter than 500 miles. If Pogo can capture just a sliver of these fares--a mere 2 percent, the partners calculate--they'll have a going concern.

Another key is the airplanes themselves. Pogo's entire existence is predicated on the availability of a new class of so-called very light jets, or VLJs, currently under development by companies such as Adam Aircraft in Englewood, Colo., and Eclipse Aviation in Albuquerque. Very light jets will carry price tags of less than half the $4.1 million it costs to purchase a Cessna CJI, the least expensive jet currently available. They will also be half as expensive to operate. Pogo has placed an order for 75 Adam A700's, a seven-seater that travels 380 mph, has a 1,200-mile range and weighs in at just around 7,500 pounds. "SUVs with wings," is how Burr describes them.

Pogo's maiden flight is planned for early 2006. Burr and Crandall intend to start small, initially operating only within a 500-mile radius of New York City. They plan to roll out further over time, creating a series of 10 or 12 regional "pods," covering areas such as Florida, northern California and the upper Midwest. They hope to build up a fleet of 1,000 planes.