Flying cars, part two: Is this what buyers really want?

First of all, a big thank you to all the enterprising students in the MaRS CIBC Presents Entrepreneurship 101 program who participated in our “Flying Cars” challenge that I proposed in the first of two lectures on marketing.  We got variety of responses on this simple case study that speculated on why the Moller Skycar, despite all the sweat and capital invested, still isn’t “flying” off the shelves.

While you have to admire the passion Dr. Paul Moller has exhibited in trying to take personal aviation beyond the mid-1950’s Cessna “flying tin can” type of model, you also have to consider many factors that make the classic idea of flying cars somewhat of a fantasy.  From the response we got, students in the class clearly understood that Moller’s approach of Vertical Takeoff and Landing (VTOL) appears to add too much regulatory/technical complexity and unrecoverable cost to the Skycar product.

In looking through a series of marketing frameworks that are detailed in both lectures, I challenged the class to look at what buyers really want in terms of “jobs to be done” and what they’d be willing to pay for an aircraft that provides key elements currently missing from flying experiences.  One major clue I left the class to think about was the newly created pilot license and Light Sport Aircraft category the FAA recently created that lays the foundation for a whole new “blue ocean” of strategic opportunities in the personal aviation market.  Federal regulations, announced in 2004, have created a new category of airplane and a new type of pilot license that requires less training and no medical check to obtain. It’s already encouraging manufacturers to build new aircraft. In the past, thanks to the FAA’s strict certification rules, manufacturers had to spend millions to introduce a new plane, and every change cost millions of dollars more. As a result, innovation was stifled.  Under the new rules, the aircraft industry is empowered to create its own consensus standards for the design and construction of these new aircraft designs with each company entrusted to certify its own compliance. That makes it vastly easier and cheaper for new ideas to find their way into the air.

Given all this industry activity, lots of aviation start-ups are sprouting up.  The most intriguing entry I have seen to date is ICON Aircraft, which makes its home in a loft next door to the offices of renowned architect Frank Gehry and near the famed Hughes Aircraft hangar where Howard Hughes’ H-4 Hercules (affectionately dubbed the “Spruce Goose”) was constructed.  ICON’s CEO, Kirk Hawkins is thinking big.  I like that.  He is seeking to take small airplanes to a more mass market level as the luxury motor sport of the 21st century.  Hawkins grew up racing motocross and jet skis, then spent a summer as a bush pilot in Alaska (hold that thought).  After the first Gulf War, he flew F-16s over southern Iraq and came home to get Masters’ degrees in engineering and business from Stanford.

When the FAA announced these tectonic industry shifts in 2004, Hawkins was still completing his MBA and the regulatory changes made him think he could build an airplane designed for a high-end consumer instead of a traditional pilot. He wanted to make an aircraft that evoked an emotional response like driving a great sports car — not intimidating like so many previous aircraft designs.  What happens then is pure “convergence innovation” that started with world-class talent.   Hawkins went on to recruit Steen Strand, a former founder of skateboard manufacturer Freebord and designer at IDEO who also had experience working at a hedge fund.  They hooked up with Paul Crandell whose past experience marketing another type of “tin can” helped take Redbull to $2 billion in annual revenues as a major lifestyle brand.  And the technical side?  ICON’s engineering and development team came from Burt Rutan’s famed Scaled Composites, which created such record setting projects as Voyager, Global Flyer, the X-Prize winning SpaceShipOne, and Virgin Galactic’s SpaceShipTwo.  It’s an aviation A-Team in the making.

ICON’s new A5 aircraft (which is scheduled to ship in 2010) sports the feature perfect for people who live near or want to get to water — an integrated hull design that eliminates the need for pontoons.  It glides across the water much like a Sea-Doo.  When you’re done flying, you just fold up the electric retractable wings and hoist it up on its own custom trailer just like a boat.  To reach a new breed of aircraft buyer, ICON also redesigned the cockpit gauges to look like they belong on a sports-car’s dashboard – a far more refined approach to design and user experience which is no doubt inspired by the company’s IDEO heritage.

What’s most exciting to me is that the ICON team have very cleverly understood is that there is an opportunity to redefine the personal aviation industry in this category.  The ICON folks have delivered much higher degree of convenience and less cost associated with flying by carefully focusing on an aircraft that brings together many of the best aspects of personal watercraft and a sport airplane.  Sure, it doesn’t do the vertical takeoff thing (such as the Moller Skycar).  The platform is simply dangerous, and as I said before, it adds unrecoverable cost to the product. The current Skycar has eight engines and its sheer complexity renders it a niche item at best.  The A5 is also not trying to be a modern day version of the Taylor Aerocar which is what the Terrafugia LSA entry at MIT is trying to perfect.  The recent engineering grads working on this design have developed a roadable approach that by its very nature will force compromises on its design performance both as a car and a plane.  Hmm… I’m not sure it will satisfy a sizable market of drivers or pilots.
Back to what buyers really want and what they may be willing to pay for.  The ICON A5 formula is all about portability, performance and affordability. It does it by taking an asymmetric (think zig versus zag) approach to its competitors and instead proposes a design that is instead floatable and portable — very smart.  The A5 can land on any airstrip or take you right to the cottage dock.  And if you don’t want to fly home (due to weather changes or you simply want to stay at the cottage till dark), you just pop it on the trailer.  It’s the perfect movie pitch: “The Sea-Doo meets the airplane.”  Now there’s a blue ocean I could dive into.  Perhaps after the recession ends I’ll look at buying one.