Supersonic's Massive Market Potential

The size of the foregone market caused by the ban on supersonic overland is difficult to estimate precisely. At a first approximation, there are nearly seven domestic passenger flights within the U.S. for every international flight, but how much of the U.S. domestic market is accessible to supersonic depends on the scenario one considers. A larger passenger jet may only be practical for high-traffic, coast-to-coast routes, while small business jets are likely economical at much shorter distances, as well. In the business jet category alone, estimates of market size average between 180 to 450 aircraft in the first ten years of overland supersonic becoming legal. 

Elon Musk has argued that high-traffic city pairs that are more than about 1500 km or 900 miles apart are best served by supersonic air travel, adding that “a quiet supersonic plane immediately solves every long distance city pair without the need for a vast new worldwide infrastructure.” As it happens, 900 miles is roughly the average non-stop distance flown per departure on U.S. airlines, suggesting the foregone domestic market is quite large indeed.


Myth: Concorde's failure proves Supersonic Can't Make Money

The Concorde flew for 27 years without making profit, leading some to suspect supersonic transport can't be commercially viable more generally. Yet the Concorde was literally a case of design-by-committee, namely Britain's Supersonic Transport Advisory Committee (STAC). Britain ultimately used the STAC's report to propose a joint project with France meant to signal interest in joining the European Common Market. Its mission was political, never to make money.

The French and British had multiple disagreements and went through multiple redesigns, causing costs to soar from the initial estimate of £95 million. By the time the Concorde entered service in 1976 true costs came closer to £4.26 billion or $27 billion in today’s dollars. Production went ahead, and after several prominent test flights over 70 orders were placed by major airlines worldwide. Then the 1973 oil crisis hit, and airlines canceled orders in droves. In the end only 20 total Concordes were ever manufactured, of which just 14 saw passenger service.

Government efforts into supersonic to date have favored large 100 to 300 seat passenger jets. Indeed, the U.S. and Soviet's SST projects were even bigger aircraft than the Concorde, and even bigger failures. In the Concorde's case, a large capacity made it extremely sensitive to fluctuations in demand. Many routes struggled to surpass 50% capacity, while other routes were shut down altogether. The lack of competitive pressure and soft budget constraints meant the Concorde simply didn't have to succeed, must less iterate to improve its design overtime. This was government's failure, not supersonic's. 

MYTH: The Overland Ban Hasn't Delayed Supersonic Transport

The ban on overland supersonic transport has played a significant role in delaying new supersonic developments in two main ways. First, as discussed above, the ban greatly restricts potential market size. And second, it closes off the business jet category as the natural entry point for the private sector to enter along supersonic's industry learning curve.

A smaller supersonic business jet doing more frequent trips would be able to meet early consumer demand without being vulnerable to the sort of losses experienced by the Concorde. Yet, according to an analysis by Gulfstream, ending the prohibition on supersonic overland is “required” for the success of affordable supersonic given that only 25% of small civil aircraft operations occur over water. The 2001 National Research Council committee on Commercial Supersonic Technology concurs, stating that “supersonic flight over land is essential for this class of vehicles [business jets],” while a survey of business jet operators found most participants “guess the chance” of acquiring a supersonic business jet “in spite of an overland flight ban to be zero. In case the ban is lifted, the chance is seen as 50%.”

The Boeing 2707 was so complex to build it never flew. Image credit.

The Boeing 2707 was so complex to build it never flew. Image credit.

Myth: Ending the Supersonic Ban Will Only Benefit the Rich

Everyone stands to benefit from supersonic transport. Nonetheless, early technological adoption among a luxury or business class of consumers is a recurrent phenomenon in the spread of innovation. As Everett M. Rogers showed in his seminal work, Diffusion of Innovation, early adopters are often willing to pay a high initial price for a new product due to greater resources and the pursuit of social status. From there, firms reinvest profits in product design and use the benefits of volume and scale to introduce subsequent product versions with more and more mass market appeal. This is how cell phones went from a luxury used by Wall Street's Gordon Gecko to being in the pockets of poor farmers in Africa. It's also the strategy Tesla Motors is using to mainstream affordable electric vehicles.

The theory of industry learning curves is of such high importance to the aviation industry that it appears to be where the idea first originated. Climbing a learning curve is like climbing a mountain. Government efforts like the Concorde or the Boeing 2707 failed because they attempted to go from the base to the top of the mountain in a straight path. Instead, industries with learning curves require trial and error in order to find the few paths up the mountain that don't run into dead ends. A market in supersonic business jets would be able to iterate on low boom and cost saving technologies while learning exactly what routes the market will bear. Only then would passenger capacities increase for the routes with the highest demand, eventually working up to full size passenger jets that bring truly affordable supersonic transport to the masses.