Conventional wisdom holds that the horrific crash of the Concorde in 2000 along with the post-9/11 aviation slump finally grounded the world’s only supersonic passenger jet for good. But as a business, the Concorde never really took off. A limited-run product of state-controlled manufacturers (Aerospatiale and British Aircraft Corporation), the Concorde was sold to then-state-controlled airlines (British Airways and Air France), which viewed the plane as a loss leader. The Mach 2 bird was good for branding, but window-rattling sonic booms confined it to traveling over oceans, and coaxing 100 passengers to fill the narrow seats at full fare proved impossible.
Despite this precedent (and half a dozen even less successful attempts to put supersonic passenger jets into service), two US companies now think they can make high-speed flight commercially viable. The trick, it seems, is to focus on the richest of the rich. Supersonic Aerospace International, founded by J. Michael Paulson, son of Gulfstream founder Allen E. Paulson, has hired Lockheed Martin’s Skunk Works to design a 12-seat private jet shaped to minimize sonic booms. Projected development cost: $2.5 billion. Meanwhile, Aerion, backed by the Bass family of Texas, is spending roughly $2 billion to build a fast (Mach 1.6) 12-seater that will likewise comply with noise regulations. The planes could begin boarding as early as 2013 and 2012, respectively.
It’s easy to bet that neither effort will succeed. What makes these startups think they can turn supersonic flight into a profitable business in just a few years when countries have tried and failed to do so for decades? It’s also easy to be cynical about the attempt. Why waste resources on really fast jets to shuttle CEOs between far-flung vacation homes? But both businesses just might work, and you should cheer them on. They may be the best chance we have of seeing commercial supersonic travel return in our lifetime.
The business case for the planes presumes sales of 300 such jets over 10 years at $80 million each - a $24 billion market. Analysts say that, given recent trends, such assumptions aren’t unreasonable. The private-jet business has risen from $3 billion in deliveries in 1996 to about $16 billion in 2006 (bigger than the market for fighter planes). Boeing and Airbus each produce about 10 luxury jets for private use annually, which sell for $45 million to $60 million apiece, while Gulfstream produces 30 to 35 planes a year that go for $45 million or more a pop.
Yes, the market needs to grow to meet SAI and Aerion’s expectations. But it does seem that selling a handful of seats to the filthy rich might be more economically feasible than selling hundreds of seats to the merely rich. And it will be far better to have supersonic travel in the hands of nimble, bottom-line driven companies than sclerotic, state-backed behemoths. Remember, most leaps in communications and transportation technology started as a tools for the ultrawealthy. Sending data on the first trans-atlantic telegraph cable cost $10 a word - in 1866. Twenty years later, telegraphic services were widely available to owners of small businesses. Henry Ford’s Model A listed for $850 in 1903. By the 1920s, the Model T went for about $265 and could be bought on credit. When it comes to technology, trickle-down theory actually does apply.
Still, only competition can start that trickle flowing, and private supersonic aviation won’t get really interesting until there are 15 greedy entrepreneurs buzzing around that $24 billion market. We need a few ambitious investors to fund supersonic plane production on par with how Union Pacific, Northern Pacific, and Atchison, Topeka & Santa Fe laid tracks in the 19th century or how Global Crossing, Worldcom, and others threaded fiber-optic cables in the 1990s.
Many of these enterprises would fail. But in the process, they’d drive prices lower, develop products and services quickly, and gain economies of scale. Then, and only then, would risk-averse pterodactyls like Boeing and Airbus be willing to take another swing at jetting you from New York to LA in two and a half hours.
- Daniel Gross
Daniel Gross (moneybox@slate.com) wrote about Philip Rosedale in issue 14.06. 
credit: Darren Braun
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And the Food? Out of This World.
