An interview with JetAmerica

New start-up airline JetAmerica has attracted a lot of attention recently, and not all of it has been positive. Sure, the flying public (and Jay Leno) have been talking about the airline's much-promoted $9 fares, but some have been doubtful of JetAmerica's business strategy. I figured that it would be a good thing to let someone with ties to JetAmerica to have an opportunity to elaborate on the airline's plan for the future.

As head of World Satellite Television News and Media Relations, JetAmerica's official media relations firm of record, Bryan Glazer is JetAmerica's spokesperson. He has many years of experience with the airline industry, having previously worked with clients such as Virgin Atlantic and jetBlue. He also reported on airline-related news stories for various television news outlets. I recently had the opportunity to talk with Glazer about JetAmerica; a transcript of our conversation (edited for brevity and clarity) is below.

Let’s start with the current business climate. With a weak economy and rising oil prices, now is definitely a challenging time to be starting an airline. How will JetAmerica succeed where others haven’t been all too successful?
The climate is really good for a startup air carrier. The reason that I say that is, you have all the major carriers that are cutting back on services; cutting back on flights, [and] in some cases increasing fares and continuing to increase additional expenses for baggage, etc. We’re going into markets where there is no competition on these routes.

If you take a look at the routes from South Bend, Lansing, Toledo, and Melbourne, Florida, into the New York metropolitan area, into Newark Airport, the people in these communities have, for years… been forced to fly on cramped turboprop planes and regional jets. They’ll have to endure very long layovers and arrive at their destinations anywhere from 7 to 10 hours later on a flight that should take under 2 hours in most cases. So we’re really not faced with competition. These routes are being served by major carriers, but they’re not getting any big jet service... [With the major carriers] they’re looking at round trips that, in many cases, start at $500.

In other words, you’re not looking at going head-to-head up against the big guys?
No, we’re not, because they are not running on these routes at all. They are, but they’re [flying] small turboprop planes and regional jets...

Some people have been scratching their heads over JetAmerica’s decision to have Toledo as a hub… there just doesn’t seem to be that big of a market there, at least in terms of O&D traffic.
Well, actually, if you take a look, statistically, people who live within a 75-mile radius of an airport will drive that far to get to an airport. We’re looking at a population base of approximately five million people in a radius of 75 miles from Toledo. The enplanement numbers specifically show that approximately a million customers a year... within that 75-mile radius fly from either Toledo Express [Airport] or Detroit Metro [Airport] to the New York metropolitan area. When I say they’re flying out of Detroit Metro, it’s because they choose to drive that far, or they’re taking the puddlejumpers and doing the connections through Detroit with Northwest or O’Hare with American.

The population base and the enplanement numbers do exist to substantiate why we can fly from Toledo to Newark… It’s more about, are you willing to get on a puddlejumper, pay $500 for round-trip airfare with 21 day advance notice or as high as $1100 at the last minute as opposed to paying anywhere from $9 to $199 on JetAmerica… You really need to look at the big picture, which is, take a compass, twist it around 360 degrees, and look at what’s there, and in each case [referring to South Bend, Lansing, and Melbourne], you’re looking at 5 million people.

It’s been said that you’re using the Ryanair model as a basis for JetAmerica. To what extent do you plan on applying that model?
In many ways, we’re mimicking the business model of Ryanair. Ryanair is the most successful airline in the world. The reason that is is because they’re using Boeing 737 jets; they’re not using 747s, for example. These jets have long range and short range capabilities. And the airports that Ryanair primarily serves, although it’s branched into larger ones, are secondary airports that have huge population bases that, again, would normally have to connect to larger airports... Ryanair is an a-la-carte airline, where you pay for everything; same on JetAmerica.

The only difference is that we will never have pay toilets on our planes; Ryanair is seriously talking about that. JetAmerica is not looking at a pay toilet situation… We’re an a-la-carte air carrier, but we’re going to draw the line on what is acceptable and unacceptable. Pay toilets are unacceptable. We do look at what you’re getting for your $9; you have to pay service fees, the September 11 fee, the taxes, the “convenience” fee to book online or to call reservation agents. When all is said and done, the reality is, $9… ends up being $25. It’s still quite a bargain.

JetAmerica’s flights will be operated by Miami Air. Are there any plans to have JetAmerica operate its own aircraft with its own crew?
There are no immediate plans… that say that we’re going to purchase aircraft. We have a very conservative business model, which is, why buy an airplane when the market is flooded with relatively new, clean, mechanically problem-free aircraft? Why buy it?... Why have the problems of owning an aircraft that cost $50 million and getting the financing, when you can simply outsource, or subcontract, an aircraft from a very reputable outfit like Miami Air... Miami Air services some of the best-known NFL, NHL, MLB teams. They’re not going to be putting their multi-million dollar players on DC-3s that don’t operate. Miami Air has an excellent reputation; they’ve been in business for 16 years… and the owner of the company makes sure that the oil is changed and the sparkplugs are changed on those airplanes every night. Those airplanes are probably better maintained than other aircraft out there today.

I point to somebody like Allegiant that’s running MD-80s… some of these aircraft are twenty years old. Granted, Allegiant is the most profitable airline in the US right now, but who wants to ride on those planes? Maybe the leisure traveler who’s willing to get from point A to point B on a Greyhound bus. We’re not a Greyhound bus, we’re an a-la-carte carrier, and so subcontracting is a really good idea.

You mentioned Allegiant Air… They’re an airline that has taken up point-to-point flying, somewhat similar, I think, to what JetAmerica is looking at.
Right, they’ve applied the Ryanair model, same concept.

And so, do you think that JetAmerica can become similar to Allegiant Air?
I wouldn’t even make that distinction. I mean, Allegiant Air is a completely separate animal. But there are some similarities in the business model... [But] in terms of analogies, you’re comparing apples to oranges. We’re running 737s and they’re running MD80s. Totally different animal.

Allegiant Air’s success has, in part, to do with the fact that it serves leisure markets, like Las Vegas and Florida. Taking a glance at JetAmerica’s initial route map, there don’t seem to be as many cities that leisure travelers might want to visit on vacation...
I agree with you, but let’s take a look at the points where they’re going. First, they’re going to New York, so we’re going to New York… we’re [also] servicing central Florida and the I-95 corridor, as far north as Daytona and as far south as West Palm Beach [via Melbourne]. We’re not currently flying to Las Vegas, which is a very appealing destination for many people, and the Las Vegas economy’s not doing that well these days too… We’re going to be bringing onboard more aircraft every quarter with the concept of having at least twenty jets by the year 2010. If you look at where are our future focus cities are, if they should come to fruition, these are all underserved markets.

One of the great things about these underserved markets is that they have small community air service grants. You can actually go ask an airport, like Melbourne, Lansing, South Bend, and Toledo, to help you fund your start-up air carrier. And in this particular case, the small community air service grants are given by the Department of Transportation to these airports to entice big jet air travel for their communities.

Speaking of the subsidies…
Not subsidies, grants. Big difference; these aren’t tax dollars, they’re grants.

So the grants, then, that JetAmerica is getting, in the form of lowered airport fees and assistance in advertising and marketing… How essential are those to the JetAmerica business plan? In other words, how reliant is JetAmerica on those grants?
We’re reliant on the airports to help us with marketing, and waiving their landing and takeoff fees. That’s pretty substantial; at some of these airports, that’s above a quarter of a million dollars. Startups can go to the airports and say, help us with our advertising and public relations and marketing campaigns. Right now we’ve got spots out there that have been produced, and the airports are placing them in their local markets. They’ll probably be more inclined to spend more of their small community air service grants once we have an airplane and we’re up in the air, which will happen on July 13th.

...Toledo has had its [grant] money sitting since 2006 and it’s decided not to use it until [JetAmerica] came aboard. Michael J. Stolarczyk, who is the president and CEO of the Toledo Port Authority, and he’s the one… who went looking for an air carrier to service his market. He went on LinkedIn and found different airline executives and approached them, and that’s how he found John Weikle… He knew that people in his community wanted non-stop air service to New York and Florida… You can’t run an air carrier on small community air service grants… you can get some seed money, and some waivers, but they aren’t going to last forever.

One last question: I’m sure that you have encountered your own fair share of doubters and naysayers who are pessimistic about JetAmerica’s long-term survival. What do you have to say to them?
I have seen consultants make forecasts that say that we have a good shot because we’re a start-up and we’re coming in at a time when there are a lot of cutbacks. I’ve seen naysayers that say that we wouldn’t have a chance. We’re going to take a roll of the dice here; we have a calculated crap shoot, meaning that the odds are with us, not against us. The ‘house’ is the ‘big boys,’ and they’re not going to win. They’ll do everything to prevent us from winning. United Airlines was quoted as saying, Chicago is our home, and we’re going to do everything to protect that. Continental Airlines is going to do everything to protect Newark Airport.

We’re not as heavily financed as jetBlue, but we have a niche market, and that’s all we’re looking for. I’m sure people said that about Allegiant; they certainly said it about Southwest, when it came about; they said it about just about every start-up. Some have come and gone. The odds are on our side. This is a calculated crap shoot; this is not a spin of the wheel. The odds are with us.


Anonymous said...

Change the sparkplugs? Really? You don't own or operate the jets, you are not the carrier - you are a glorified travel agent, and on your first operational issue, you are going to point the finger at Miami Air and say "sorry, call them".... Good luck.