The Air Launch System Enabling Technology (ALSET) project is a Japanese Ministry of Economy, Trade and Industry (METI) funded project whose purpose is to study air launch orbital payload delivery systems and related technologies. The project is a first step toward an operational commercial air launch system that will use a multistage solid rocket to deliver small payloads on the order of 100 to 200 kilograms into Low Earth Orbit (LEO). An air drop type launch approach to space transportation provides high reliability, flexibility, and responsiveness to meet the future needs of small satellite operators. ALSET culminates in a series of drop tests of an inert launch vehicle (a mass simulator) to demonstrate the technologies necessary for the operational system. This paper will show the progress of system design and drop test planning. Trade studies are presented leading to a baseline system design and concept of operations. Factors considered in the trade studies include aircraft/launch vehicle interface, extraction and deceleration methods, and operational regulations. Commercial concept of operations to respond the demand to launch small satellites with responsiveness, advantages of the air launch system over existing launch system will be shown in this paper. The baseline system design uses a carriage extraction system method whereby the rocket is extracted from the aircraft on a carriage. A 15-foot pilot parachute is used to draw two 28-foot extraction parachutes and pull the carriage from the aircraft. Three G-11 cargo parachutes are then deployed for deceleration prior to release of the rocket from the carriage for launch. The baseline test site selected for the drop test is the Yuma Test Center (YTC) in Arizona, USA. The large drop zones available at the YTC are ideal for ALSET testing. Additionally, the YTC’s considerable experience with similar test activities, including the NASA Ares Jumbo Drop Test Vehicle drop tests, minimizes technical risks.