In 2000, Texas billionaire Robert Bass came across a theory of supersonic speed and aircraft wing technology that made him reach for his checkbook. First, he bought five textbooks used in Stanford University aeronautics classes to bone up on the subject. Then as he delved into the physics of planes, he became increasingly convinced that a profitable supersonic business jet was viable. Says Bass, who flew on the Concorde, which took passengers across the Atlantic faster than the speed of sound for 27 years until it was retired in 2003: “The more I dug into it, the more interesting it got.”
So he struck a deal with Richard Tracy, whose patented computer model of laminar airflow over wings had inspired him, and assembled a team of a dozen people, including an engineer who once headed Boeing’s (BA) high-speed civil transport program, to make the dream a reality. That didn’t happen at supersonic speed, however. Bass’s Aerion spent the next decade—and more than $100 million—working out technical kinks, causing many naysayers to wonder if his high-flying dreams would ever get off the ground.
Aerion can no longer be brushed off as a billionaire’s folly. In September the company signed a technology sharing deal with Airbus Group (AIR:FP), which agreed to help with the design, construction, and certification of the AS2 business jet. Airbus, itself formed from the companies that built the Concorde, lends credibility to the project, which is still in the design phase and is targeting a first flight in 2019. Allan McArtor, chief executive officer of Airbus’s U.S. unit and former head of the U.S. Federal Aviation Administration, says his company saw value in Aerion’s technology and predictive tools for airflow. “We want to get out ahead of the future,” he says. “We don’t want to get caught by surprise. We don’t want to read about it.”
Aerion projects the AS2 will shave more than 4 hours off the 10 hours and 25 minutes it now takes to fly from San Francisco to Tokyo, fueling demand for 600 such jets over a 20-year period—even at a price of $110 million a pop. “On a first-mover basis, there’s a pretty significant market there,” McArtor says, noting Aerion’s pioneer advantage: There won’t be room for four supersonic business jet makers.
Private aviation will adopt supersonic flight before commercial carriers, McArtor says, because big airlines don’t sell speed; they sell luxury service for business travelers and low-priced seats for tourists in coach. But corporate executives and wealthy entrepreneurs would pay to fly faster than competitors, says Steve Varsano, founder of The Jet Business, in London, which helps customers buy and sell jets. “There’s no question that there’s a market for supersonic,” says Varsano, who says he has five customers who signed letters of intent to purchase the Aerion jet. (It began taking deposits before the 2008-09 recession slowed development, and some deposits were refunded.)
The Concorde failed because it had limited range (1,000 miles less than the AS2), was too loud to fly over land, and lacked the comfort that wealthy passengers were accustomed to, says Bass, a member of a storied Texas oil clan, founder of Oak Hill Capital Partners, and head of private equity firm Keystone Group. “It was fast class. It was not first class,” he says. “It was a tourist-class seat going very fast.”
The AS2 doesn’t require a change in the U.S. ban on civilian supersonic flight over land, Bass says. It can cruise close to the speed of sound there and then open the throttle to Mach 1.6 once it’s over water—on the international runs where speed matters most. A likely rival is skeptical. Gulfstream Aerospace (GD) CEO Larry Flynn says he doesn’t see enough buyers to make a supersonic jet feasible until the sonic boom can be mitigated enough to permit flights over land. “That’s going to take some law changes, particularly in the U.S.,” says Flynn, who keeps a team of engineers working on a solution.
Bradley Mottier, a General Electric Aviation (GE) vice president for business and general aviation, says an engine design with the right combination of power, noise abatement, and fuel consumption to power the AS2 is technically attainable—at a cost. “Can we make an engine for that? Absolutely,” Mottier says. “The challenge with the supersonics is what’s the [sales] volume going to be, and how much investment is justified by the potential volume.”
(Bloomberg Businessweek)
