Imagine a world where mini planes are as ubiquitous as New York City taxicabs. That might be what it takes to fix our inefficient airline system.

Question: Can private companies like Scaled Composites fill that research gap?

Burt Rutan: Government funding comes from a decision that, at the highest level, a president wants something done. He doesn’t have to get consensus, but he decides whether or not he likes the ideas of his science folk and his futurists and he wants to hang his hat on something that he feels is important.  Okay, so then if it’s research like Apollo you have a simply stated, easily provable goal, man lunar trips and you’ve got the taxpayer paying for it.  There is nothing in there that says return on investment.  What we’re doing now and what all the commercial guys are doing, Elon Musk for example, he is in that by saying hey, if I do this and this and I beat the pants off of Boeing and Lockheed on rocketry costs I have enormous return on investment.  Richard Branson now is looking at it and saying well listen, if this works and something is robust and a low operating cost, which is very low compared to the ticket price this is going to expand.  I can lower the cost and get as many people in there as we can possibly fly and still make a profit, so there is return on investment. 

So when you look at commercial flight the justification for it.  What it boils down to generally is a business plan and how robust is it and how confident that it will work. I’ve seen six different business plans for suborbital space tourism.  We dealt with four different folks to get the funding that we eventually picked Virgin to fund and so every one of these has had a very attractive forecast financially, so I think that is what is going to drive it, but you have to have a breakthrough that’s very different than we’ve ever had in manned spaceflight and the breakthrough has to be not just that we’ve reached something that looks good for national prestige or is gee, we’re the first ones to find the moon rock and therefore our scientists can be the first ones to find out how the moon got there or how old it is you know.  And I’ve always been puzzled by why that is really important.  First of all, I think it’s very important, but what I’ve been puzzled by is when they get the rocks they break it up into 20 pieces and they send it out to our adversaries to study too.  You know and wait a minute.  We paid for this you know and if you go into NASA centers you find a lot of foreigners there.  Why would the taxpayer want to fund with US taxpayer’s research money something that is capitalized better by our adversaries than we capitalize on?  You know fly-by-wire, six composites, that sort of thing, the research that we did on that Airbus has gotten more advantage from that because they were more aggressive at putting it into their airplanes in a earlier time period.  So I’ve always been puzzled by it.  It doesn’t make sense to me. 

I think we will see that the job of sending people to orbit or sending cargo to orbit, whether it’s the International Space Station or space hotels like Bigelow wanting to do and has already done a couple subscale ones and a whole bunch of other applications.  I think you will see those primarily commercial endeavors and that they have to be justified from a standpoint of return on investment and have a financial motive you know and there is a profit motive to get it justified. 

Question: Who or what stands out right now as pushing the envelope in the field of transportation?

Burt Rutan:  Well, I think it’s very different which one you look at.  Let me look at airplanes and I’ll address the subject of domestic air travel in the United States, not the 14 hour flight to Sydney, but getting anywhere within say the Continental US.  The reason that there is a need there is I would argue there has been enormous amount of technologies that should have improved this since the ‘50s, but our domestic travel since the ‘50s has not improved.  It’s gone backwards primarily because of more gridlock on the ground portion of it, but to go from my house to grandma’s house in Peoria takes longer now and you know the hub and spoke system was done for the benefit of the airlines, not the benefit of the air traveler.

I like to compare what we should have for domestic air travel in the US, compare that to the taxicab in Manhattan Island.  Here is a small area with a lot of destinations and they have 14,000 yellow cabs.  That system wouldn’t work if they had only say 4,000 cabs.  It wouldn’t work.  People would walk or they’d you know they’d go and do the subway and then walk from there. You have to have it convenient by having large numbers and low enough cost so that it takes you point to point when you want to go. The fact that there is 14,000 and there I don’t know how many people.  I guess it’s in the millions of people that travel that way.  What it means is you don’t have the dead time. If you rent an airplane like say okay, what do you got, a leer jet or a king air?  Take me to Peoria.  Why he comes back without passengers almost all the time or he sits there for days, which he can’t afford to do, so if you have enough of them you can get on your Blackberry and say I got three guys.  I want to go tomorrow at ten and I want to go to Peoria okay, the airport that’s closest to that and an expert system will come back and say okay, here is what it will cost and it will also give them 20 other options and say listen, if you can go an hour later it will cost less and the reason it does is because that airplane then can skip over to Saint Louis and run people back on their schedule. 

So you might have some options there and a few numbers down is going to be half the price of what you asked for, but if you absolutely have to take the same number of people from the same two airports at exactly the same time it might be expensive, but with a little bit of flexibility it can be at a price that is competitive with a coach seat in airlines.  Now if you realize that you’re going to get there with the most desirable itinerary you’re going to get there twice as fast as the airlines.   That’s real important to a lot of folk and so they’ll pay a premium for it, but here is the thing.  I like to think of it how that system works with yellow cabs in an enormous city like New York City as just taking that and floating it out through the whole US and people wouldn’t fly airliners anymore.  It’s not convenient to do so.  It’s again, it’s like taking busses on Manhattan Island and people take cabs instead. 

Here is a problem.  It doesn’t work unless it’s filled into a point where it all of a sudden starts getting a lot lower cost because of dead travel.  What I’m saying is deadhead legs.  And you don’t get the time advantages until you have the system big enough.  Now that takes probably somewhere around eight to fifteen thousand airplanes. 

For the whole US.  And people don’t think that way.  Somebody had a big start, put a lot of money into it.  I don’t know how much, probably half a billion into this little jet, the Eclipse and so on, but the problem with that airplane was that it would be like having a cab in New York and you go around the back and you got some bags and the trunk is welded shut, and you get in the cab.  You hold the bags on your lap and a cabbie says, “Yeah, I hope you don’t mind, but to get up there to Central Park I’m going to have to find a service station and get some gas and it will take longer.”  And again, that airplane was short range, no baggage, so these things have to have a lot of range.  They have to have a low stall speed, so I can go into little airports and again, they have to have a lot of endurance.  It’s not extremely important that they’re real fast.  You’d be surprised that the cruise speed is not as big a factor as you would think.  You know some people say, “Gee, if you go 350 miles an hour instead of 250 miles an hour wow, the whole system will work fast.”  That doesn’t work that way, your flexibility in order to go somewhere without stopping for gas nor to go into a smaller airport, which might be right there.  You can walk across to the business you’re going to go to is what is going to save that transportation time.  So you know again, this is an assumption that you could have a major upheaval, a major change in domestic air transportation system, you know thousands of little airplanes that you hale like taxicabs, but having no change in the efficiency on the ground. 

Now initially that is going to cost more, but keep in mind it is as efficient in terms of its fuel use as airliners when you count all the costs, so I think a mature system, one that has had you know a couple decades of real growth and high volume and a scenario where to compete in that and to stay in the business you’ve got to go out there and work like hell to get three or five percent more efficiency in order to have market share and that’s what happens materially.  When that system is matured then you have a transportation system that’s enormously important because it’s the only thing that I can think of that will make transportation in domestic US as good as we had it much better than we had it in the ‘50s instead of no improvement.

Recorded on January 25, 2010