An upstart carrier uses business jets to grab nonstop travelers the big airlines cut loose
When U.S. airlines consolidated into giants, they cut down on hubs, reducing the number of nonstop flights from many cities. Since 2008, Delta has ditched Memphis, United has quit Cleveland, and Milwaukee has gotten whacked by the acquisitions of Midwest and AirTran Airways.
Pittsburgh, Indianapolis, Las Vegas, and Nashville all once were hubs. And as American and US Airways look to the completion of their merger over the next year or so, Phoenix's status as a hub has been questioned, given the airline's big operations in Dallas-Fort Worth and Los Angeles. (Executives of American have said they don't plan to shrink Phoenix as a hub.)
Into this void flies an airline called OneJet, using seven-seat business jets to sell flights Monday through Thursday from Indianapolis to Milwaukee, Memphis, and Pittsburgh, with plans to announce Nashville as its newest destination today. It plans to establish a second focus city after Indianapolis next month and is talking with officials in its three destinations about expanding with new flights.
“These cities have lost so much service, and there’s so much demand” from business travelers, Chief Executive Officer Matt Maguire said. “There’s just a lot of low-hanging fruit out there right now.”
Fares are roughly two to three times the cost of advance-purchase economy fares on airlines with connecting routes, he said, though they vary. A OneJet flight from Milwaukee to Indianapolis on Aug. 18 was recently selling for $339.10, or $110.50 more than a United itinerary connecting in Chicago. The company has topped 1,000 passengers after three months of flying and sells its seats through online ticket sites and and corporate travel agencies. Most flights depart in the morning and return in the evening.
“They’re fulfilling a need that the community has, especially the corporate consumer,” said Mark Busalacchi, director of business development for the Indianapolis airport.
Dallas-based OneJet focuses on cities east of the Mississippi that are roughly a one-hour flight apart. It uses a Beechjet Hawker 400XP operated by Pentastar Aviation Charter, a Michigan-based aviation firm owned by Edsel B. Ford II, the Ford Motor founder’s great-grandson.
The Hawker is a private jet with leather seats and ample legroom, but in a cost-conscious business environment OneJet assiduously avoids talk of any overt luxury, focusing entirely on its main attribute of nonstop service. “We did not want this to be seen as a private jet product,” Maguire said, calling the brand “a premium utility” for the business traveler. Even if the nonstop fare is $100 to $500 more than a connecting flight, many employers may not care, figuring that saving their executives time and boosting their productivity are worth it. (OneJet carries almost no leisure traffic.)
OneJet won’t be doing cross-country or major cities such as New York, Chicago, or Boston, both because the economics of longer flights don’t work in its business plan and because the aircraft cabin is too tight for longer hauls. “We won’t do anything over 1,000 miles,” said Maguire, 29, a former sales broker for a regional airline. The company is targeting cities that have about 30 business travelers each way daily. Many of them, such as Memphis and Pittsburgh, once were home to major hubs operated by the network carriers (Delta and US Airways, respectively).
In lieu of secondary cities, airlines have bolstered their positions at fortress hubs, with almost all of their flying now part of the traditional “hub and spoke” networks—an evolution that was predicted, and feared, by airports nationwide. That’s one reason OneJet’s business plan isn’t likely to incur a competitive response from the big players, said Robert W. Mann, an aviation consultant in Port Washington, N.Y., and a former American Airlines executive. “You really won’t see them putting in Indianapolis to Milwaukee, because it’s what they’ve consciously been avoiding doing for the past five years,” he said.
In the mid-1980s, American turned Nashville into a mini-hub and had similar designs on Denver. In Milwaukee, the former AirTran Airways and Frontier Airlines battled fiercely, with both companies expanding heavily in 2010. Republic Airways acquired Milwaukee-based Midwest Airlines in 2009, along with Frontier, part of an ill-fated attempt to expand beyond its regional flying for the network carriers. In 2010, passenger traffic at Milwaukee’s General Mitchell International Airport jumped 24 percent, to 9.8 million from 2009, and then plunged by 37 percent over the following three years amid dramatic cuts by both carriers. Last year, the airport served 6.5 million passengers.
The story is similar at Memphis International Airport, a former Northwest Airlines hub, which has seen Delta slash daily flights from 175 to about 50 over the past three years. In its 2014 fiscal year, Memphis passenger traffic fell 30 percent, to 3.9 million from the year earlier. In 2012, the airport saw nearly 8 million passengers.
“We end up giving more speeches than Billy Graham when it comes to [seeking] air service,” said Will Livsey, senior manager of air service research and development for the Memphis airport. Officials there hope to see a new OneJet nonstop flight to Pittsburgh.