In a risky revision of its basic regional feeder model, ExpressJet has unveiled plans to launch independent scheduled services with 44 of the 69 regional jets rejected by Continental Airlines.
The Houston-based carrier will launch in April scheduled services to 24 US cities, offering 59 market pairs without any tie-ups with mainline carriers. ExpressJet chief executive Jim Ream says the cities are all medium-sized communities that have lost service from larger carriers or have service only into major hubs. Ontario near Los Angeles will be ExpressJet's biggest base, with connections to 14 cities.
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Jim Ream: ExpressJet will be aiming for a high daily aircraft utilisation to keep its costs under control |
The carrier is refurbishing its 50-seat Embraer 145s with all-leather seats and satellite radio as onboard entertainment. It will serve free snacks and cold pasta dishes and will have its own loyalty plan based on segments flown, but will have no relationship, scheduling or otherwise, with Continental.
ExpressJet insists that its plan differs from the last attempt by a regional carrier to launch scheduled services after losing its major partner. In that failed experiment, the former Atlantic Coast Airlines renamed itself Flyi after breaking away from its partner United Airlines. Flyi, also known as Independence Air, flew 50-seaters on the same routes in and out of Washington Dulles that it had flown as United Express. But it could not match the marketing and pricing power of United, which quickly replaced it with other feeders.
ExpressJet insists it will be different because it will exclusively serve point-to-point routes on which the majors offer service only through hubs and with connections. These include: Boise, Idaho Corpus Christi, Texas Omaha, Nebraska and Raleigh/Durham, North Carolina. Ream says linking these smaller cities is different from flying into and out of a competitor's fortress hub, the untenable situation that forced Independence Air out of business within 18 months of its June 2004 start.
For example, Ontario is an alternative gateway to congested Los Angeles International. Other major ExpressJet bases will include Austin in Texas, Kansas City in Missouri, Sacramento in California, San Antonio in Texas and San Diego in California.
Although none of ExpressJet's 59 city pairs now has nonstop service from any carrier, Southwest Airlines flies to 20 ExpressJet cities and offers one-stop or connecting services on many of the city pairs, notes Merrill Lynch analyst Michael Linenberg. For example, between Albuquerque, New Mexico and Ontario, Southwest offers 10 daily combinations on a one-stop or connecting basis. So the question becomes what fare premium if any would ExpressJet be able to get for its nonstop service compared with Southwest's connecting service?
In one sense, ExpressJet will replicate the original Southwest pattern of direct service in a point-to-point system, a pattern that Southwest quickly outgrew as it began hub operations.
Although regional jets have always been high-cost aircraft, as the Independence Air debacle demonstrated, ExpressJet will be aiming for a very high daily aircraft utilisation that will keep its costs under control, Ream says. He adds the airline will use the other 15 ERJ-145s no longer needed by Continental in ExpressJet's "really lucrative" group and corporate executive charter business.
ExpressJet will continue to operate over 200 ERJ-145s for Continental, which first notified its former regional subsidiary last year of its intention to reduce their feeder deal by 69 aircraft. Meanwhile, Continental has unveiled plans to add 70-seat turboprops to its regional network. Colgan Air will operate 15 Bombardier Dash 8 Q400s for Continental from the end of 2007.
Source: Airline Business
