Move over United, American and Delta. Several new players have suddenly emerged in the commercial aviation business, and a few already are staking claims to small pieces of the not-so-friendly skies over the U.S.
In the last couple of months-despite abysmal conditions in the industry as a whole-at least a half-dozen fledgling passenger and freight carriers have been hatched.
Some have been unable to raise working capital and exist merely on paper. But a few have begun serving markets, routes and customers that existing airlines either can`t, or refuse, to serve. A couple more expect to get off the ground before year-end.
Some of the new airlines, such as Dallas-based Braniff International, have names that have been a part of the airline industry`s past and, therefore, already have wide recognition.
Most, however, have monikers that few outside of the airline business have heard of, at least so far-names like Reno Air, Baltia Air and KC Air, to name a few.
At a time when the airline industry is hurting for traffic and being squeezed financially, one would think executives of existing airlines would welcome fresh competition about as much as they welcome attempts by Congress to reregulate the industry. Not so.
”I love it; it`s free enterprise at its best,” said David R. Hinson, chairman of Chicago-based Midway Airlines. ”The fact that new airlines are coming into being is a sign of a healthy, growing economy. We should all cheer.”
From an outsider`s point of view, the idea of starting an airline today would seem to make about as much sense as opening a gas station on a block that already has half a dozen of them, including two that just closed for lack of customers.
Consider what has happend within the airline industry in just the last 10 months.
In January, Eastern Airlines, one of the nation`s largest and oldest carriers, ran out of cash and shut down.
Historic Pan American World Airways, hit hard by the downturn in international traffic and the high costs of jet fuel during the Persian Gulf crisis, has edged precariously close to the brink.
Midway, Continental, America West and Pan Am have filed for federal bankruptcy protection.
More Top Picks Best Golf Balls For High Handicappers
And virtually every major carrier, including United and American, the nation`s two largest, has been struggling to keep above a sea of red ink.
Consider, too, the recent history of startup airlines.
People Express Airlines and Presidential Airways Inc., two of the most visible offspring of airline deregulation in the 1980s, are both gone, victims of poorly conceived financial and operational plans.
Gone too are most of the other 100 or so carriers that sprang up after the federal government opened commercial aviation to just about anyone with a pilot`s license and a pair of wings.
Nevertheless, hope springs eternal in the airline industry, a business that historically has attracted a disproportionate share of entrepreneurs with the nerve of riverboat gamblers.
But there`s more here than wild-blue-yonder, wind-in-your-face romance.
For one thing, there`s an increasing number of small but rapidly developing markets and customer groups across the country in need of air service, executives of the new airlines point out.
The larger established carriers have abandoned these markets because of their financial troubles or simply chosen not to serve them, preferring to concentrate on more lucrative markets, or to expand globally.
”The big carriers clearly are overlooking some markets because they`re so wrapped up in expanding so much,” said Michael Feder, managing director of Stratford Partners Inc., a Chicago-based firm that specializes in consulting for troubled companies, including some in the airline industry.
”Consequently, they`re opening up niches for new airlines to play with.”
Starting a new airline also makes sense from the standpoint of aircraft and pilot availability, Feder and others point out.
As a result of Eastern Airlines` failure and the rash of recent consolidations by carriers such as Midway, aircraft lessors find themselves with hundreds of idle airplanes on their hands. In an effort to get them flying and generating revenue, they`re increasingly willing to lease them to newcomers at bargain rates.
The Eastern shutdown and consolidation also has created a substantial pool of available pilots willing to work for reduced salaries in return for an opportunity to fly again.
”If someone is in a position to take advantage of the lower aircraft lease rates, hire from the large pool of available pilots, and has a market niche to support operations, then maybe the idea of starting a new airline isn`t as big of a gamble as it sounds,” Feder added.
But even Feder predicts that the big carriers may eventually squeeze out the upstarts. ”I admire what the new, niche airlines springing up are trying to do, but I don`t know if I`d want to be one of their investors,” he said.
One new airline betting on success is Flagship Express Services Inc., an all-freight airline headquartered in Ypsilanti, Mich., but operating out of Chicago`s O`Hare International Airport.
The carrier, equipped with three DC-8 cargo jets, launched its night-only air service for containers and pallets earlier this month. Besides Chicago, it is serving the New York, Los Angeles and San Francisco markets.
”We think Flagship Express is the right idea at the right time,” said Judith Rogala, the cargo airline`s president. ”With guaranteed service and late-night departures and early-morning arrivals, our airline will provide an important link to companies that are controlling costs through just-in-time inventory management and other sophisticated logistics-management
techniques.”
By using aggressive pricing measures and guaranteeing service availability, Rogala said the company expects to attract several customer groups, including freight forwarders, international airlines and courier companies.
Among the new passenger carriers springing up, Braniff International has captured the most attention.
The discount airline bought the name of the twice-bankrupt and subsequently liquidated Braniff Inc. The new Braniff this month launched daily, full-service, non-stop flights between Dallas-Fort Worth and New York/ Newark. It also began flying between Dallas-Fort Worth and Los Angeles with a fleet of eight aircraft and 300 employees. Other routes are planned.
”We can offer airline passengers an attractive alternative, especially during these current economic hard times,” said Jeffrey Chodorow, a former Philadelphia real estate developer who is chairman of the new Braniff.
”Because our basic, non-restrictive fares are cheaper than the cheapest restricted fares of other airlines, we feel we`ll be able to attract a lot of people who now cannot afford to fly,” Chodorow added.
Other new passenger carriers on the drawing boards include Baltia, which plans to fly between New York and several cities within the Soviet Union; Reno Air, which hopes to entice gamblers to Nevada`s ”second city” from the East and West Coasts and the Midwest; and KC Air, which plans to serve Dallas, St. Louis and Minneapolis out of Kansas City.
Recently a group of Atlanta businessmen, joined by several former Eastern Airline pilots, announced plans to form a new, scaled-down version of the old Eastern. The carrier, which would be based in Atlanta, would initially serve 12 cities in Florida and the Northeast. The group hopes to begin operations as early as November.
Whether some or all of the new carriers will keep flying depends on how successful they are in marketing their product and raising capital, said Midway Airlines` David Hinson.
More Top Picks Asus Tuf A16 Review
”One thing that they have going for them is that they have plenty of niches out there ready to be served,” he said.
Others, however, are not so optimistic about the upstarts` chances.
”Having an incumbent airline make money in this business is very tough,” said Mark Daugherty, an airline analyst for Dean Witter Reynolds.
”Starting an airline from scratch is triply tough.”