Just when you thought it better to stay at home, there is reason to spring for the vacation you've been putting off, or travel to a business meeting by air, since these new airlines seek to restore frills that were chopped from the major carriers, in recent years.
Frequent fliers are sick to death from their cramped legs, the tiny radius in which other passengers are unable to pass by them while seated, and the lack of space for baggage as travellers seek to avoid the almighty surcharge. Part of the problem is the concentration of the industry. Airline travel has often been a game dominated by the major carriers and a few regional players. In such a market, airlines had fairly free reign to eliminate the things you liked best, or charge extra for them. But there are signs that new entrants into the air travel market are going to give the entrenched players a run for their money, and go after niche markets that are currently underserved.
While four airlines (including American Airlines) have declared bankruptcy or reorganized under bankruptcy protection since 2010, their departure from smaller routes has opened the way for entrepreneurial startups in the aviation industry to begin air travel, or lobby the FAA to do so.
PeopleEXPRESS and California Pacific Air are two aviation startups that see opportunity despite rising fuel costs and more tight-fisted consumers. They may take a page from the playbook of nimble players like Atlantic Airlines, which has grown to serve both business and consumer audiences from its base in central Florida.
PeopleEXPRESS, based in Newport News, VA, announced plans to run regular flights from Williamsburg International Airport in Virginia to various regional airports around the East Coast, including Pittsburgh, Providence and West Palm Beach. They are positioning themselves as a low-cost alternative to the larger carriers, and one with perks like free checked bags and assured seat assignments.
Currently, they are applying to the FAA for the requisite permits, and making the rounds of the venture capital circuit to raise investment among potential funders.
The particular name and game-plan of this new venture in air travel has raised a question in the mind of certain industry analysts, as People Express was also the moniker of a no-frills airline that operated from 1981 to 1987, when it was merged into Continental Airlines amidst falling revenues. Curiously, People Express had once utilized an alternative name of PeopleEXPRESS , just like the newer startup. However, it operated out of Newark Airport, and pursued transatlantic flights from there to London, instead of a regional focus.
Mike Boyd of Boyd Group International commented, “The name has given them a lot of rah-rah but what was PeopleEXPRESS 25 years ago was a failure.”
A second airline, California Pacific Air (CP Air) out of Carlsbad, CA, is the vision of Ted Vallas, an experienced aviation executive who has been pursuing his dream to run flights out of northern Diego County for decades. CPA is the latest incarnation of that dream. Mr. Vallas sees air travel from the northern San Diego hub as the logical extension of Pacific Southwest Airline, which pulled out of the regional airline business and left an underserved market in its wake.
Mr. Vallas explains the competitive advantage for CP Air this way: “Operations out of Carlsbad’s Palomar Airport will save North County residents (1) a typical three-hour roundtrip to San Diego’s Lindbergh Field, (2) a delay of ninety minutes standing in lines, clearing security, and preparing for flight, and (3) an average expense of $24 for parking.”
CP Air caters to both leisure and business travelers, with a four-point unique value proposition including:
1. Time savings
2. Assigned seats (and no middle seat)
3. Lower trip cost, and
4. First bag checked for free.
They have set their sights on air travel via 7 routes to 6 major destinations in California and Nevada, plus Cabo San Lucas in Mexico. According to their Twitter handle, on February 6th they passed Phase 1 of the FAA certification process, and are on to Phase 2, the period of Design Assessment. Using the Brazilian-built Embraer 170’s, flights should be able to accommodate up to 80 passengers in narrow-body, twin-engine jets.
Companies such as these may be a natural extension to other existing airlines that pick up where the major carriers leave off, one example of which is Atlantic Airlines.
Atlantic Airlines runs short regional flights from Lakeland, Orlando and Tampa, with its base of operations in Lakeland itself, in central Florida. They have seen a steady growth in their business, despite the ease with which big players can drop prices to outcompete a new entrant.
Atlantic Airlines serves 86 cities in Florida, utilizing small aircraft that can take off and land in communities with fairly short runways not suited to larger commercial aircraft. They take very small passenger groups—sometimes just one or two people plus a pilot—from International Airports in the large metropolitan areas like Orlando, Miami and Tampa, to the small rural areas of Florida, or vice versa.
This intra-Florida airline does not solely cater to wealthy second-homeowners. They have been building a reputation among business travelers too, with a tagline of “America’s Hometown Airline.” There are both scheduled flights and charters available to serve business travelers with a need to get places with little prior notice. Their service--nearly on-demand flights--can be available in as little as 4 hours from the time of a person’s call.
Atlantic Airlines has also figured out how to remove the hassle factor from air travel, cutting down pre-flight arrival time from 2 hours to a mere 15 minutes. They don’t charge for either bags or pets, two bugaboos that certainly get frequent fliers riled up in these days of ever-diminishing legroom and ever-rising surcharge for extras.
So while major carriers are battling the triple whammy of rising oil prices, declining appetite for air travel spending among consumers, and high and inflexible overhead costs, they would do well do to monitor what looks to be several aggressive new entrants into the regional air carrier market. Activity that constitutes a sideshow today, could be competitors eating their lunch tomorrow.
Photo courtesy of Creative Commons, Leandro's World Tour.
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