So one day you’re running this airline that has 274 airplanes but the flying public doesn’t really know it because the planes are painted in the colors of another, bigger, airline. Then that airline decides it wants to break off its exclusive arrangement with you and sends back 69 of those airplanes. What to do?
Start a new airline, was the decision for Jim Ream and his colleagues. And ExpressJet was born.
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"We had been thinking about this for some time, trying to figure out just how to do it," said Ream, president and CEO of ExpressJet, in an interview before giving a speech at the F. Russell Hoyt National Airports Conference last week at Loews Ventana Canyon Resort.
He said he doesn’t usually like to give industry speeches but he made an exception in this case because he wanted to thank airport operators for their support in helping launch his new airline this year.
Getting ExpressJet launched hasn’t’ been easy and Ream admits to some sleepless nights. But, he says, the Houston-based carrier has a strong balance sheet still operating more than 200 aircraft under contract to Continental Express and Delta Connection, which allows the company the luxury of starting up the separate, independent airline under its own name.
New airlines usually start with a few airplanes flying between some targeted cities but Ream said ExpressJet is different in that it put 42 airplanes in the air connecting 24 cities over a 90-day startup, from April 2 to June 9.
In retrospect, he said the decision by Continental to stop using the planes was "a gift." His new airline already had the planes so there was no need to go out and acquire new aircraft. All of ExpressJet’s planes are 50-seat Embraer ERJ-145 jets. Having one make of plane reduces costs when it comes to crew training and maintenance and allows for more flexible scheduling.
The next question was then what to do with this "gift."
Because a lot of the flying the airline had been doing for Continental involved flying from smaller cities to major hub airports, Ream said his executives had been looking at the metrics of connecting passengers between what he called "larger medium-sized cities" without having to go through hubs.
From Tucson International Airport, ExpressJet operates 11 daily departures to six destinations: Ontario, Sacramento, Kansas City, Austin, San Antonio and El Paso. So far the reaction from Tucson travelers has been good, Ream says.
He says passenger traffic here is meeting expectations and, overall, is "about in the middle of the pack" compared to other cities.
The only city that clearly has not met expectations is Corpus Christi, Texas, where ExpressJet has already announced it will discontinue service as of Oct. 1.
Ream says the airline is in the midst evaluating its route structure and will make additional adjustments before the end of the year. Tucson isn’t in danger of losing ExpressJet and, most likely the changes will be limited to some scheduling adjustments.
He even hinted that Tucson could be in line for additional service to new cities. In his speech, Ream suggested there be nonstop service to Colorado Springs and Spokane. But local airport officials were quick to say he was using those as examples of the size of cities ExpressJet is serving and was not necessarily being specific about route plans.
In the tough new economic environment of the airline industry, the difference between profit and loss can be close, Ream said.
"For our size aircraft, if we fill 35 seats (on a flight) then I’m taking a sack of money to the bank," Ream said. "But if we fill only 23 seats, then I’m taking an even bigger sack of money and turning it over to the people I owe for debt service."
Beyond filling up airline seats, Ream says he wants passengers to enjoy the experience.
Although the airlines uses smaller regional jets, the seats aren’t smaller – in fact, he says, they’re slightly wider. They also have memory foam padding and the legroom is comparable to what’s on other airliners. Each seat is also equipped with XM satellite radios.
There is also something else passengers haven’t seen in a while: food service. Usually it’s a pasta dish or a sandwich but even there, Ream says he wants ExpressJet to stand out.
He told a story of choosing between having flights catered with a cheap sandwich costing about $1.20 or one priced closer to $2.
If a passenger is willing to pay $150 to $200 for an airline seat, "the least we can do is cough up the 60 cents for a better sandwich."
Ream also proclaimed he was the guy behind the idea to charge $1 a beer on ExpressJet flights.
"It’s funny how things work out," he said. "I’d been working with the design guys on pitch (which has to do with the amount of legroom between seats) and they were saying they couldn’t do anymore but when I asked to make more room for beer, they got that done in a hurry."
Ream admits there have been glitches along the way. The website has been frustrating and still doesn’t do all that he would like for it do.
But, he says, things are continuing to improve and he wouldn’t want to go back to the way things were. Asked what he would do if Continental decided it wanted to ExpressJet to bring its 69 planes back, Ream said "I guess we’d have to go out buy some more airplanes because we’re going to keep ExpressJet." Contact David Hatfield by e-mail at dhatfield@azbiz.com or call (520) 295-4237.
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