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New Airlines Vying for Their Place in the Sky

The airline business is profitable again – at least for most domestic lines – and plenty of good flyable airplanes are available at bargain prices. This combination is likely to lure some of the wannabe companies that seem to be attracted to the airline business like moths to a lamp. One reader asked me:

“Now that the airline business looks good again, what are the prospects for some interesting new startups?”

{{{SmarterBuddy|align=left}}}The short answer is, “Only two recent startups are operating, but three more claim to be close.” Three generally follow the Allegiant model – emphasizing smaller cities and avoiding direct competition with the biggies – and the other two focus on Las Vegas.

Typically, today’s startups either already have crews and planes as charter operators or plan to contract their flying out to charter operators. This strategy minimizes the upfront capital requirements and bypasses most of the government red tape.

Vision Airlines

Although Vision has been around as a charter operator for a while, its extended scheduled network is new. It generally follows Allegiant’s extremely successful business model: Most of its flights link small and mid-size cities to and from Destin/Fort Walton Beach, in the heart of the Florida panhandle’s “Redneck Riviera.” Among the underserved cities it’s currently flying to are Asheville, Baton Rouge, Greenville, Huntsville, Knoxville, Niagara Falls (not Buffalo), and Shreveport. Only a few flights bypass that hub.

As with Allegiant, most flights operate only once to three times weekly. The only daily flights are those that link Louisville with Atlanta, a route that predates the current network. Most flights are in 737s or small 30-seat turboprop Dornier 328s. The airline also has some larger planes in its fleet – 737-800s and 767s – though it apparently uses them only for charter services. The booking site has a provision for selecting a class of service, but no separate classes are currently offered.

Typically for these days, Vision charges for checked baggage: The first bag costs $15 in advance or $20 at the airport; the second costs $20 or $30. Sodas and snacks are “free,” with no alcoholic beverages available. Advance seat assignment is also “free.” I didn’t see any other “hidden” or “gotcha” fees, but you may encounter some. Although Vision offers hotel accommodations, it doesn’t seem to push them the way Allegiant does.

Direct Air

Direct Air is another Allegiant look-alike, flying to golf mecca Myrtle Beach and several Florida destinations, including Melbourne, Orlando/Sanford, Punta Gorda, and West Palm Beach from such smaller regional cities as Allentown, Kalamazoo, Niagara Falls, Rockford, Toledo, and Worcester, as well as a few bigger cities. Flight frequency this spring ranges from two to five flights a week. Some routes are seasonal; some flights make intermediate stops. Flights are in a mix of MD88 and 737 models, all coach. Checked baggage fees are $25 for the first and $30 for the second, in advance; $5 more at the airport. As with Vision, the airline promotes hotel packages, although not so aggressively as Allegiant.

The schedule posted effective May 1 shows considerably more flights than the current posting. Whether the line actually expands this much is still to be seen.

It’s no surprise that the first recent startups imitate Allegiant. That line is by far the most profitable, in terms of margin, of any U.S. line. So far neither Direct Air nor Vision seems to be stepping on Allegiant’s toes anywhere, but that could change.

The Carlsbad Experiment

By “summer of 2011,” says a news release, California Pacific Airlines will start linking regional destinations with its base at Palomar Airport in Carlsbad, California, in northern San Diego County. Planned nonstop destinations include Las Vegas, Oakland, Phoenix, Sacramento, and San Jose; with service to Cabo San Lucas starting sometime later. The line proposes to fly Embraer 170s, very comfortable regional planes with strictly 2×2 seating and no middles in the main cabin and a few first class seats. The line also promises no baggage or ticket-change fees and low fares.

Palomar Airport is obviously the key here. Even though it’s only about 35 miles from San Diego’s Lindbergh field, it’s convenient to several generally high-income residential areas, including Oceanside, Encinitas, Rancho Santa Fe, and San Marcos, as well a few communities in Southern Orange County. Small airports such as Palomar are generally much more user-friendly than the big metro fields.

At this point, I won’t hazard a guess as to whether California Pacific ever gets into the air, let alone survives. But if you live in the area, I suggest you follow developments.

Vegas, Here We Come

Two wannabe airlines are focusing on Las Vegas. LV Air seems to be a bit out front at this time. Its plan is to fly four daily nonstops from New York/JFK to Las Vegas – in 767s, no less. The business plan is built heavily around working closely with major casino resorts. It calls for major casinos to buy some seats and “give” them to high rollers, and to sell air/casino packages to others. For all travelers, the plan is that when travelers check in at the counter at JFK, they’re also checking in to their Vegas hotel: They get room keys, and the airline takes them and their baggage directly to their hotel rooms. The plan also incorporates a number of high-tech gimmicks, such as onboard Wi-Fi, smartphone recognition throughout the process, and holographic flight announcements. Most flights would include hotel packages, and the line also plans to pre-package reservations to major shows and other entertainment. Currently, the aim is to start flying in August of this year. If LV Air is successful in the New York market, plans include expanding to “international” origin points.

Avatar Airlines seems to be planning much the same sort of operation – based on links with major casinos – with 747s, yet! It apparently morphed from an earlier proposal called “Family Airlines.” The website is singularly lacking in any substantive information.

In some ways, these plans seem to be a modern take on a system that operated in the 1950s, when casino operators ran charter flights from the Los Angeles area to Vegas and from the Bay Area to Reno at either very low fares or “free,” to attract gamblers to the tables. Will the plan work from New York to Vegas? We may find out by summer.

At this point, you have to regard both proposals as extremely speculative and iffy. However, the idea of strong casino links may develop legs and allow a startup to compete with what would otherwise be brutal competition from the established lines.

The Busy Startup Graveyard

The history of startup airlines since deregulation has not been a happy one: Many never got off the ground, and almost all of those that did manage to fly lasted less than a year. Among the recent proposals, three that had websites, at least until lately, were Primaris (all-luxury transcon), Quest (I don’t remember much), and RivieraJet (I don’t remember much about this one, either). Air Gumbo still posts a website about its Louisiana-themed airline plans, but the latest news “bulletin” is dated May, 2007.

Startups have faced a panoply of barriers: Inadequate financing, poor business plans, high fuel prices, recessions; you name it. Beyond those factors, established lines are merciless in targeting any startup that shows any signs of life: They slash fares, add frequencies, pile on zillions of frequent flyer miles, and threaten corporate clients with loss of sweetheart contracts. Still, determined lines such as JetBlue and Virgin America have established themselves even in the highly competitive long-haul marketplace, and Allegiant and its imitators have succeeded by keeping out of the giant lines’ way.

For now, I see no reason not to try one of the startups – with the obvious proviso that the future of any new startup is uncertain. Before buying a ticket I’d check into the current schedule, I’d have a “Plan B” in mind for my trip, and I’d make sure to buy any future ticket with a credit card, just in case.

Your Turn

Have you flown one of the newer airlines? Tell us about it by adding a comment below.

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