ExpressJet's risky foray into independent branded flying in 50-seat regional jets may yet work despite widespread scepticism the US regional would simply repeat the disastrous history of Independence Air.
Despite ugly initial load factors ExpressJet chief executive Jim Ream insists the new scheduled operation has "made real progress". The operation, which launched in April after ExpressJet lost some of its Continental Express flying, was largely responsible for a $26.4 million loss in the second quarter. In the year-ago quarter, ExpressJet made a $23.7 million profit.
The new unit offers point-to-point flying between underserved cities and Ream says that 70% of its 24 new markets are doing well. He adds load factors have risen from 39% in the quarter ending June to 60% in July, though that is still below breakeven.
Ream expects improvement when the carrier upgrades its reservations system so it can sell higher-yielding seats through travel agents instead of selling solely through its own website, which is the case now. Average fares are now about $117 and "they need to go up a bit", Ream says.
Velocity Group consultant Doug Abbey says: "I'm not disturbed by these numbers. Load factors approaching 40% after only 30 days of service by an unknown company are probably tracking just as expected. The true test is how effectively can the markets be stimulated, but it is simply too soon to know in aggregate."
Source: Airline Business