Air taxi flies in face of the norm-A twin engine jet for only $837,500

High-tech view plays key role in design, service

Flying around the country from Seattle a few years ago as Paul Allen’s
right-hand man, Vern Raburn experienced the frustrations of commercial
airline service.

By JAMES WALLACE
SEATTLE POST-INTELLIGENCER AEROSPACE REPORTER

Attending various board meetings and looking for emerging technology
companies in which Microsoft Corp.’s co-founder could invest, Raburn
wasted a lot of time flying in and out of big airports he would rather have
bypassed on his way to someplace that was not a part of the commercial
hub-and-spoke system.

From that experience was born his idea
of an air-taxi service for the masses, a
revolutionary business jet that would
cost far less to buy and operate than
those luxury Cessna and Gulfstream jets
that carry the mostly rich and famous.

Raburn envisioned tens of thousands of
these air limos would pick passengers
up from their local airport and haul them
directly to their destination, for about
the cost of an airline coach seat.

His dream plane for the service, the six-seat Eclipse 500, was rolled out last
month and will make its maiden flight any day now.

This is perhaps the most-watched project in the aviation industry today. And if
it is anywhere near as successful as Raburn is convinced it will be, he will have
transformed general aviation in much the same way that his friend and former
boss Bill Gates transformed the computer industry.

"I spent 25 years in the high-tech world … and if there is one thing that the
high-tech business brought to the world of business, it is a different way of
thinking about risk and market creation," Raburn said in a recent interview.

Raburn, a self-described "aviation nut" who can wax eloquent for hours on any
number of topics, persuaded Gates and about 200 others to invest in Eclipse
Aviation Corp. Raburn’s company, based in Albuquerque, N.M., has raised
about $240 million of the more than $300 million needed to take the jet
through its flight test program and certification by the Federal Aviation
Administration. That should come in December 2003, according to Raburn.

There is much skepticism in the industry. But there is also support.

Raburn is challenging almost every convention in business aviation.

He is relying on cutting-edge manufacturing technology that The Boeing Co. is
using to make its new Delta 4 rocket. But he also is applying lean
manufacturing principles adapted from the auto industry.

The two Williams International turbofan engines on the Eclipse 500 weigh only
about 85 pounds each. But they each produce about 770 pounds of thrust,
which means they have a much greater thrust-to-weight ratio than the huge
engines that power Boeing’s 777 and other commercial jetliners.

"What we have here is a high-tech view of the world, combined with a
passion, combined with some new technology, all of which is combined with
some real-world understanding of value creation from the standpoint of the
need for transportation from other than the 26 major hubs," Raburn said.

Eclipse Aviation has been vague about its exact number of customers. Raburn
recently told The Wall Street Journal that more than 500 companies and
individuals have put down non-refundable deposits.

"For years I’ve watched Boeing and Airbus battle over what’s an order and
what’s not," Raburn said. "Even the general aviation guys do it. We just made
the decision not to talk about orders."

Raburn also has not disclosed production rates, although he said the
Albuquerque Eclipse plant could "easily" turn out more than 1,000 jets a year
once production begins.

One publicly disclosed order for 112 jets came earlier this year from the new
Swiss company Aviace, a private jet club. Aviace has said it will supply the
planes for a fixed term to networks of operators, who will in turn sell them to
club members

The Nimbus Group, a start-up charter company in Fort Lauderdale, Fla., had
ordered 1,000 of the jets for a fleet of air taxis throughout North and South
America. But the deal fell through a few months ago when Nimbus could not
raise the necessary money.

The Eclipse 500 will have computerized flight controls and will carry five
passengers and a pilot — or four passengers and a pilot if the buyer decides on
an on-board toilet. It will be able to take off and land at just about any small
airport in the country.

And the price for all this is $837,500. That’s about a quarter of the cost of the
next-cheapest corporate jet, Cessna’s Citation CJ-1.

Eclipse Aviation claims the cost to operate its jet will be about 56 cents a mile,
compared with about $1.75 a mile for the CJ-1.

A number of technical breakthroughs make this possible, Raburn said.

One is a manufacturing process known as friction stir welding.

Boeing is using this same process at its Delta 4 rocket plant in Alabama.

But this is the first time that it has been tried on thin-gauge aircraft aluminum.
Traditionally, rivets are used to connect fuselage skin panels.

Eclipse hired away the Boeing engineer who ran the Delta 4 assembly line. He
is now in charge of friction stir welding for the Eclipse 500.

The lead process engineer for Eclipse came from Lockheed Martin.

Raburn recalled that Boeing Chairman Phil Condit said more than a year ago
that Boeing had produced about 3.2 miles of friction stir welds without a single
defect.

Using this process on the Eclipse 500 will save time and labor costs, Raburn
said.

"We are seeing radical decreases in assembly time," he said.

There are other manufacturing innovations, Raburn said.

"It is stuff we have not shown the world a lot of," he said. "It is pretty much the
way the auto industry has been working for 20 years. High-precision parts. It
has to do with building quality in as opposed to inspecting quality in. It is a
contemporary, conventional way of thinking about manufacturing."

Raburn said his toughest job is not meeting technical and manufacturing
challenges but in trying to raise money for the project.

"There is zero experience in the current investment community about investing
in new airplane companies," Raburn said, noting that since World War II there
have been only two or three successful airplane companies.

Besides Gates, investors include Harold "Red" Poling, retired chief executive
of Ford Motor Co. Poling is chairman of the board for Eclipse Aviation.

Raburn said Gates invested because of their friendship. He was not investing in
an industry.

Gates was best man at Raburn’s wedding years ago and recently hosted
Raburn’s 50th birthday party.

They have known each other since the early days of Microsoft, when Gates
and Allen founded their new software company originally headquartered in
Albuquerque.

Raburn and Gates both shared a love of fast cars. Raburn was working in
California at the time, and whenever Gates would come out on business, they
would get together and race go-carts. Raburn was eventually hired as
Microsoft’s 18th employee not long after Gates and Allen moved their
company to Bellevue in the late 1970s. Raburn was made president of the
consumer products division.

In that job, he licensed the hit game Flight Simulator from its creator Bruce
Artwick.

Raburn said Gates thought it was a bad business decision. It turned out to a
big money-maker for Microsoft.

One little-known fact about Microsoft Flight Simulator, Raburn said, was that
for the first five or six years after it was licensed by Microsoft, the aircraft
instrument panel on the package had the same "N" number as Raburn’s private
plane.

"I’ve always been crazy about airplanes," Raburn said.

Born in Oklahoma, Raburn grew up in Southern California where his father
worked for Douglas Aircraft.

He learned to fly planes as a teenager.

Later, thanks to the stock rewards that came with working those early years at
Microsoft and his subsequent software adventures, Raburn had more than
enough money to buy his own planes. In 1987, the year after Microsoft went
public, Raburn bought John Travolta’s Lockheed Constellation, a stunning
prejet commercial transport known for its distinctive triple tail and
salmon-shaped fuselage. Although the plane cost Raburn about $100,000, he
and his wife spent more than a million dollars refurbishing it over the next
decade.

Raburn left Microsoft in 1982.

But he remained in the software business and prospered. He was executive
vice president of Lotus Development and chairman and chief executive of
Symantec. In 1990, he started the Slate Corp. by raising money from venture
capitalists to develop and market a handheld computer similar to what would
later be the successful Palm Pilot.

Slate failed, and Raburn went to work for his old friend Allen as president of
the Paul Allen Group.

During the time he worked for Allen, Raburn commuted to Seattle from his
home in Arizona, and he was making frequent business trips in his job.

Raburn said the frustrations and lost time that he experienced flying
commercially on business trips for Allen was one factor that led to Eclipse
Aviation.

Eventually, Allen bought a Cessna Citation business jet and made it available
for Raburn.

That jet had two engines built by Williams International.

As an aviation historian, Raburn was well aware of Williams.

A Seattle native, Williams had founded Williams Research near Detroit.

It developed engines, including a small turbine model that the military
considered using in the 1960s as a personal jet pack.

Later, Williams developed the engine for the Tomahawk cruise missiles. Next
came the Williams FJ44 engine used in business jets such as the Cessna
Citation. But this engine, while developing more than 2,000 pounds of thrust,
also weighed several hundred pounds.

Williams’ goal was an engine that would weigh only about 80 pounds but that
would develop more than 700 pounds of thrust. The development work was
done in collaboration with NASA.

"When I saw what Williams was building, it became really clear to me that
here was an opportunity to define a new type of aircraft, which in turn would
create a new type of market," Raburn said.

Meanwhile, Raburn and Allen parted on amicable terms.

Eclipse Aviation’s first news release said Allen was an investor. That was
wrong, although it still gets reported that Allen and Gates are both investors.
Allen has never invested in Eclipse, Raburn said.

In 1999, a year after the new Williams engine was certified by the FAA,
development work began on the first Eclipse 500.

"I had always been looking for a way to do a business in aviation," Raburn
said.

But he also was aware of the old aviation adage that says that the way to
make a small pile of money in aviation is to start with a big pile of money.

"I figure if I really understand the high-tech business model … then I should be
able to go into any kind of industry and help that industry grow by applying a
lot of the same business techniques from the standpoint of risk and
development and market creation," Raburn said.

He used the example of Gates and Microsoft.

"Bill won’t tell you that he needs to sell 53 million copies of Windows in order
to justify the development of Windows 2000," Raburn said. "That’s not how
they think about it. They think they can build a market, reach new customers,
create something new. …

"So we don’t think about this (Eclipse) as we have to sell 2,631 airplanes. We
are building a foundation here. A technology foundation."

P-I aerospace reporter James Wallace can be reached at 206-448-8040 or
[email protected]

http://seattlepi.nwsource.com/business/83284_eclipse19.shtml