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Finding A Place In The Sky: What Does The Future Hold For America’s Small, Regional Airlines?

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Finding A Place In The Sky: What Does The Future Hold For America’s Small, Regional Airlines?

Finding A Place In The Sky: What Does The Future Hold For America’s Small, Regional Airlines?
August 07
11:42 2017

MINNEAPOLIS — Getting around the South was difficult, expensive and time consuming for Trey Fayard. So the New Orleans-based attorney came up with a solution – he created an airline. And while most of us likely wouldn’t go to the great lengths Fayard did, the needs he sought to meet are essentially the same needs that all of the country’s small, regional airlines meet on a daily basis. They don’t have big names, and most don’t have big planes, but these carriers play a role in the aviation industry that many of us may not have even known existed.

Today, what we call a “regional airline” was really all that existed in the early days of commercial aviation, primarily because the airplanes back then couldn’t travel much further than a couple hundred miles. But with the advent of larger airplanes came the creation of bigger airlines and broader networks. This didn’t necessarily hurt the smaller carriers, it just shifted their role to where they were now getting passengers to and from hubs for flights on the bigger airlines.

The 80s brought about a wealth of changes in the industry, as many large legacy airlines commenced their own regional operations. American Eagle and Delta Connection, regional branches of the parent airlines, were both founded in 1984 and were each made up of several individual regional carriers. But American and Delta didn’t pioneer this concept – it had actually been around for more than a decade.

In 1969, Allegheny Commuter began operating as a feeder for Allegheny Airlines, a forerunner of US Airways, which later merged into American Airlines. Allegheny was the first to practice “code sharing” by a small airline with a larger one. The commuter later became Crown Airways, which was bought out in 1994. As the big guys continued to gain a foothold in the market, many of the independent regional carriers began to fold.

The industry has certainly seen its ups and downs over the last half-century, but despite the demise of many, a number of the regional carriers stood the test of time. Even today new ones pop up every once in a while, meaning there is most certainly still a need that these airlines are fulfilling.

Trying Something New In New Orleans: GLO Gives Customers Back The Time They Lost On The Road


GLO Airlines operates a small fleet of SAAB 340 aircraft. (Credits: Carlos Barcelo)

GLO Airlines operates a small fleet of SAAB 340 aircraft. (Credits: Carlos Barcelo)

Fayard, Founder and CEO of GLO Airlines, found himself driving too far and too often to places he felt should have air service. And experiencing that lack of connectivity firsthand is what ultimately inspired him to start the airline.

“Honestly, it came down to one day where I was sitting down, deciding if I was going to go for it or not… this is a unique, good product,” he said. And as an attorney and someone who knew the airline experience, he did, in fact, go for it. “I didn’t want to open the newspaper when I was 65 years old and see that someone else had done what I had thought about doing… I wouldn’t forgive myself.”

Founded in 2013 and entering service in 2015, the relatively young airline offers daily nonstop flights between its base in New Orleans and Shreveport, Huntsville, Little Rock, Memphis and Destin-Fort Walton Beach. They operate a fleet of three Saab 340Bs – twin-engine turboprop planes that Fayard says are extremely comfortable and, with only 30 seats, allow for a lot of attention to each customer. “They seem to like that a lot,” he said.

BONUS: CEOs Discuss NextGen Regional Air Service 

GLO strives to bring customers a “local feel” wherever they operate – not just in New Orleans. “We’re high-touch, nonstop… we’re essentially selling time,” Fayard said, adding that despite being small even for a regional carrier, GLO isn’t immune to the typical challenges that plague any airline. “We’re always on the lookout for competition and potential threats,” he said.

One such challenge came in April 2017, when less than two years after entering service the airline announced plans to file for bankruptcy protection. Operations were only briefly suspended, however, as GLO entered back into service less than 24 hours after the announcement. Airlines, and especially the small ones, are just as susceptible to the economic challenges that come with operating any business, so declaring bankruptcy in this industry is far from unheard of.

GLO joins the likes of other small, regional airlines like Massachusetts-based Cape Air, whose nearly 100-plane fleet makes it one of the largest U.S. regional airlines, and St. Louis-based Air Choice One, whose 12 single-engine Cessna 208B Grand Caravans service 10 destinations – mainly in the Midwest.

Many regional carriers not only help commuters get to and from locations that would otherwise take half a day to drive to, they also receive subsidies under the government’s Essential Air Service (EAS) program, which helps maintain a minimal amount of scheduled air service to more than 150 communities across the country that otherwise may not be profitable routes.

Cape Air Uses Innovation To Face Challenges Head On


Photo: Tim Johnson

Photo: Tim Johnson

Cape Air CEO Dan Wolf Photo: Tim Johnson

Cape Air CEO Dan Wolf Photo: Tim Johnson

Cofounded in 1988 by pilots Craig Stewart and CEO Dan Wolf, employee-owned Cape Air serves a total of 39 destinations on the East Coast and in the Midwest, and in the Caribbean and Micronesia, making them one of the largest regional carriers in the U.S. “The company was started by a group of people who had a real passion for flying, and we still do 28 years later,” Wolf said.

The airline’s 91-plane fleet is mainly comprised of Cessna 402s, but they also have one Cessna 414 and four Britten-Norman Islanders – all of which seat eight to nine passengers. The biggest in the fleet are their three ATR-42s which can accommodate 48 passengers. The ATRs operate as United Express and service Guam, Rota and Saipan.

Wolf thinks there are many reasons people choose to fly with them, not the least of which is the fact that there are many routes where Cape Air is the only airline flying. “Most of the people who fly with us are repeat customers who we’ve gotten to know on a first name basis… we’ve developed relationships with them,” he said.

Wolf joked when asked about what challenges the airline faces, “Aside from the shortage of pilots and mechanics, and the fact that no one is building us an airplane to fit our mission… I’d say we don’t have any.” But Cape Air has been working for years to address all of these issues in innovative ways.

Ten years ago, recognizing that there would be a pilot-shortage, Cape Air developed a gateway program that serves as a “bridge” between flight school and a career as a pilot – an industry first. The airline partners with nine flight training universities and JetBlue in an effort to create what they call a “predictable pipeline of pilots.” Students are interviewed during their sophomore year and, if accepted into the program, go on to work for Cape Air straight out of college, and from there they go to JetBlue.

To address the mechanic shortage, Cape Air works in conjunction with Cape Cod Community College on the school’s Aviation Maintenance Technology program. “We donated an airplane to the school and have supported them in other ways too,” Wolf said. Students who complete the program graduate with an Associate’s Degree and an Airframe and Power Plant (A&P) license.

“As for equipment… we searched high and low for a U.S. manufacturer and couldn’t find one to replace the fleet we’re currently operating,” Wolf said. So for the last six years, Cape Air has been working with Italian manufacturer Tecnam to find that replacement. The airline signed a letter of intent to order 100 of the 11-seat twin-engine P2012 Travellers, and if everything goes smoothly, Cape Air could take deliveries as early as the end of 2018. “It looks to be a really good airplane,” Wolf said.

Air Choice One: A Midwest Family Business Serving Their Communities On And Off The Ground


AirChoiceOne2

“We are in the service of others,” Air Choice One President and CEO Shane Storz said. “We’re not just about getting rich quick and growing a company that just worries about profits – we’ve grown to be really serious about servicing our communities, because their community is our community.”

Air Choice One was established in 1979 as Multi-Aero Inc. and today operates more than 17,000 flights annually from larger hubs like Chicago-O’Hare and Minneapolis-St. Paul to smaller regional airports in cities like Burlington, Iowa and Ironwood, Mich. among others that are subsidized through EAS.

Currently, the airline only operates a dozen nine-seat Grand Caravans – small planes that provide customers more of a personal, first class type experience, which is good for a company that prides themselves on catering to passenger needs.

But being able to provide that customer service daily isn’t always easy.

Similar to Cape Air, Air Choice One says their challenges are less about finances and more about federal requirements. “Since the FAA changed the pilot requirement flight times, it has put our industry into the challenge of having qualified crew members available to sustain service,” he said.

In July 2013, the Federal Aviation Administration announced increased qualification requirements for first officers who fly for U.S. passenger or cargo airlines. The “1,500-hour rule” requires first officers to hold an Airline Transport Pilot (ATP) certificate, which means they need 1,500 total hours as a pilot – a 500 percent increase from the 250 hours they were previously required to have through a private pilot certificate.

Because Air Choice One’s Caravans are only powered by a single engine, however, their pilots are only required to have 1,200 hours. “This gives us an edge for not having to compete with the ‘big guys’ for pilots, and helps us maintain reliable, dependable service to our communities,” Storz said.

Air Choice One President and CEO Shane Storz

Air Choice One President and CEO Shane Storz

Air Choice One has also had a tough time maintaining a group of qualified mechanics to work on the planes due to the A&P license requirement.

As far as growth, Storz does see bigger aircraft in Air Choice One’s future, specifically the Beechcraft 1900 – an airplane he says will provide controlled growth for sustainability. “We don’t want to lose the momentum of the last nine years.” In addition to expanding the fleet, the airline continues to look at possibly expanding to additional markets and creating new routes.

And as they grow, Air Choice One continues to invest more in the communities they serve, not just in the sky, but on the ground as well. The airline makes it a point to give back – one example being Branch, a St. Louis-based soup kitchen that the airline provides financial support to. “We’re increasing our cause-marketing campaigns and currently doing a lot in a number of our cities,” Storz said.

With A Looming And Potentially “Devastating” Threat To The Industry, Optimism Is Key 


AirChoiceOne3

As the skies become even more crowded, due in large part to growth among major airlines that continue to add new routes, Fayard thinks air service in big cities will get worse, and that the dip in service will mean a spike in business for GLO. “As they do their thing and get bigger, and move more people through their hubs, they’re leaving uncovered markets for us.”

But where Fayard sees opportunity, Addison Schonland, partner at the consulting group AirInsight, sees anything but.

“The increase in cramped air travel options to these cities is in no way good news for small, rural airlines – there’s no association,” Schonland said, adding that small airlines simply can’t make it without these subsidies. “Any airline that depends on EAS is going to suffer from its removal,” he said.

Removal of EAS isn’t out of the question either – President Trump’s proposed budget calls for completely eliminating the federal funding for air service in rural communities.

Citing their poor track record of success, Schonland says these small airlines tend to suffer from industry volatility in general. “They’re a recipe for financial disaster,” he said. Air Carolina, Altair, Flight Alaska, Lynx Aviation… these are just a few of the many regional airlines that didn’t have what it took to stay afloat.

BONUS: OneJet: The Airline Industry’s Newest Entrant 

But despite several small airlines having failed over the years, Wolf, Storz and Fayard remain positive and optimistic about their own airlines and the industry in general.

“I always say, ‘you can build a mile of runway and go anywhere… you can build a mile of road and go a mile’ – and if EAS went away, the government would essentially have to connect all of those communities with high-speed rail… and when you think of that cost, you realize what a bargain EAS really is,” Wolf said. And while he admits that Cape Air would need to significantly downsize if the program lost its funding, Wolf says it wouldn’t have a huge impact on them. “Forty percent of our flights are through EAS – we’re invested in it, but not dependent on it.”

Wolf sees the real challenges being the pilot shortage in the short term and the overall economics of running an airline in the long term. “It’s a capital-intense, highly-regulated, labor-intensive industry… and all of those pressures impact the cost of running a business which in turn impacts the viability,” Wolf said, adding that President Trump’s proposal to privatize Air Traffic Control could create financial stresses on the regional airline industry as well.

Storz hopes that by continually building their markets and increasing ridership, Air Choice One could still be sustainable even if EAS was no more. “We’ve been able to sustain our program for more than nine years, and we’re very proud of that,” he said.

However, with the airline itself incurring 100 percent of costs on a number of its routes, Storz admits that getting rid of EAS would certainly have an impact on the industry, and not a good one. “It could be devastating for any EAS carrier or community… especially the ones that are fully relying on it,” he said. “We realize that there is an unknown every year, but I don’t think it will ever totally go away.”

Storz thinks the program will always exist in states like Alaska, since 60 EAS communities can be found in the Land of the Midnight Sun alone – roughly a third of the entire country’s total.

“My goal is to continue to build ridership, and to be prepared so if that day was to come, I could go point-to-point, dropping off and picking up… and hopefully maintain enough customers to stay in business,” Storz said.

And as one of the few airlines that hasn’t ever gone through a major restructuring, Wolf remains optimistic about the future of Cape Air. “We believe in slow, steady growth and building value in the long-term, and I think we’ll continue to do that,” he said.

As for GLO, Fayard sees a future that is unlimited and very broad, noting that the airline plans to expand its fleet and add more destinations come fall. “As long as we continue to deliver good products at a good price, I’d say we’re in pretty good shape,” he said. “If there’s ever any more time to give back to people, a regional airline is certainly the entity to do that.”

The role of regional carriers today is certainly much different than it was 40 or 50 years ago, but with so many of them still doing their thing and doing it well, it’s hard to imagine what the aviation industry would be without them.

Figuratively, it’s almost as though most of these small airlines are flying “under the radar” – maybe you don’t hear as much about them because they don’t have as big of marketing and advertising budgets as the major airlines do, or maybe it’s just because they’re small, humble, often times family-owned businesses. There’s a reason that so many of them have stood the test of time – and with a lot of the major airlines skimping on amenities and charging more for less, it doesn’t come as a huge surprise that a decent number of travelers still want that touch of glamour that was commonplace on flights in the past.

The regional airlines are kind of like the “mom and pop” shops of the aviation industry. People love attention, they love personalization and they love that “first class” feel. Just like Gary Portnoy sings in the Cheers theme song, “You want to go where everybody knows your name,” and it seems that most of the regional airlines are trying to bring you there.

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About Author

Annie Flodin

Annie Flodin

Communications professional and aviation journalist based in Minneapolis. In my free time, I enjoy plane spotting, writing, and spending time outdoors. Twitter and Instagram at @thegreatplanes.

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