Vision Airlines Talks to Me About Its Plans (Across the Aisle)

Within a couple days of my post on Vision Airlines last week, I found myself on the phone with David Meers, Senior Vice President of the airline. As I said before, I had a lot of questions for him, and now I’ve had the chance to ask him directly. I’m still very skeptical of the viability of the Louisville route, but as David says, it’s such a small part of the company that it’s not going to make or break the airline. I’ll reserve judgment on the Florida stuff until we see what it actually is in the next couple months.

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Cranky: It seems like you’re dipping your toes in a lot of different places right now, so is there an overall strategy, is it more of a transition, or is the goal just be in a bunch of different places?

David: We’ve always had a diversified revenue stream for our company Vision Airlinesbut this is the logical next step for us. . . . As I mentioned in another article, it’s hard being in Las Vegas to ignore what Allegiant’s done. We like their business model. There’s really no barrier of entry to us. In fact, we feel like we have a great product, and we feel like we can deliver tremendous value to the consumer. So moving into scheduled service into underserved markets, particularly in leisure destinations, is a logical next step for Vision Airlines.

Cranky: I guess I’m a little confused about how Louisville fits into that.

David: Well Louisville – Atlanta is something we looked at as long as 6 or 7 years ago in terms of setting up a corporate shuttle for UPS. There’s been a need for a very long time. We’re probably personally familiar with it as a company because we have offices in Atlanta and a maintenance facility and offices in Louisville, Kentucky. So we as a company have experienced the high fares and limited service on that route. We’ve heard from other companies that there’s a need for low cost travel between those two city pairs so for us to start initially into Louisville and Atlanta made a lot of sense. There’s only one carrier on that route nonstop, Delta Air Lines, and if you look at Delta’s fares, they’re high. That was a very easy decision for us to make but in the long range most likely we’ll focus primarily on leisure destinations.

Cranky: So this is sort of a one-off opportunistic look?

David: Initially it’s a one-off but I could see us looking at other markets that are underserved that might connect to business centers. That’s not out of the question.

Cranky: Is there any sort of subsidy on this route?
David: Well, not unlike numerous airports around the US, they have incentives for new routes, new carriers, but in terms of any revenue subsidy or anything like that, there is no revenue subsidy.

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Cranky: You had mentioned in Today in the Sky that you were hoping or expecting that UPS or Home Depot, large companies like that would come. The way that the legacy airlines structure their corporate agreements, I imagine it’s going to be very hard for them to shift business your way in a place like Louisville. Is this something you think you can get around?

David: I don’t want to comment on specific negotiations with specific companies, but with that said I think it’s safe to say, being a Louisville native, I know there is a large number of folks that will fly on Southwest from Louisville to Birmingham, rent a car and drive to Atlanta simply because of the high fares. I don’t expect us to cut into Delta’s market share. Delta isn’t our target. We’ll probably encourage folks to fly versus drive or fly to Atlanta instead of flying to Birmingham and then driving. I think Delta is probably not concerned with Vision Airlines with 32 seats per departure 2 times a day. Our threshold for success is very very low, so we’re pretty confident that we’re gonna be in this market for a long time.

Cranky: I would tend to agree that Delta’s not paying close attention but if they start seeing their big customers going other places, then they’ll notice. But if it is pulling people off the roads that’s a different story.

David: You’re right. We have 64 seats a day. Delta has 10 or 12 departures. We’re barely putting the number of seats that Delta has in the market on a regional jet. They’re the 800 lb gorilla and I’d be surprised if they respond to a 32 passenger Dornier. I’m not sure if it would be wise.

Cranky: Yeah, but rational behavior is not always the way things work in this industry.

David: I understand, and we’re not naive enough to think there may not be a response, but we’re not betting our company or betting the farm on this particular route. We have the Dorniers, we have pilots. This is not a very big risk for Vision Airlines.

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Cranky: Let’s talk about Florida. When do you expect to be putting that out?

David: I imagine you’ll see an announcement in the next 45 days. We’re finalizing negotiations right now with various airports.

Cranky: This will be more along the lines of an Allegiant-style model?

David: Exactly. You’ll see us focus on point-to-point routes going from underserved cities to leisure destinations and also letting consumers buy additional services like a hotel room and a package or a car or various activities, golf, show tickets.

Cranky: Do you have a lot of those relationships set up today?

David: We’ll initially start with air seats to the destinations but we’re in the process of finalizing negotiations with a number of resorts and providing via the global distribution systems, provide the gateway for that product that we can distribute with air seats to the consumer and provide a great value. We’ve looked at the economics and the value we can deliver and we’re confident we’ll be extremely competitive.

Cranky: When we’re talking about the Allegiant model, what is it specifically that interests you most? Are you looking at a couple days a week, more frequency?
David: I think you’ll see us 3 or 4 days per week in the cities we’re gonna be announcing. It’ll be less than daily service initially. The schedules will be around the typical consumer travel patterns. A Sunday-Wednesday-Friday, Tuesday-Thursday-Saturday type of travel pattern fits with the destinations. The playbook is fairly easy to read. It’s easy to see what the travel patterns are, it’s easy to see what the other providers are doing. To emulate success is a fairly easy thing to do. Particularly when we feel like our cost structure and biz model puts us in a place to be more competitive.

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Cranky: Are you looking to expand the fleet or just use the airplanes you have today?

David: Both. We’re going to start with the aircraft we have today. We have three 737-400s under contract. One’s in maintenance as we speak with the others in the next 30 days. We’re looking to add more airplanes in the spring.

Cranky: More 737s?

David: Right.

Cranky: Are you focusing more on the classic 737 because it’s lower cost or are you looking at the newer ones as well?

Cranky: For the moment, we’re looking at adding more classics. As we look into higher utilization routes, it’s not out of the question for us to add additional [next generation 737s]. You get some fuel savings, and a little more speed and more seats, but if you’re not using the airplane more than 180 hours a month, it doesn’t make sense to use the airplane.

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Cranky: Are you looking at using the 767s in schedule operations?

David: Primarily we’re focused on charter with the 767s but it’s not out of the question. We’ve had some discussions already with other carriers to provide ACMI agreements. I think you’ll see the 767, we expect to have worldwide operating authority in the next 60 days and the next step would be to finish up ETOPS.

Cranky: Would you be looking at long haul low cost operations in the future?

David: Absolutely.

Cranky: A lot of airlines have tried that, not in the US as much, and it’s been a tough nut to crack.

David: I think if you look at what Allegiant mentioned with respect to Hawai’i, the only barrier to us is ETOPS. That’s a very important thing to consider.

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Cranky: You guys aren’t raising money for this, this is all being funded from existing operations?

David: Right. Unlike other airlines, we’ve been around since 1994. So we’re not solely dependent on the earnings from these commercial routes. We have ICE contracts, ACMI work, casino contracts. So there’s other revenue sources for the company besides limited scheduled service. That’s what I mean when I say I think we have the business model that gives us an opportunity to be out with a low cost fare because we’re not having to support our entire company from earnings from the commercial operations.

Cranky: In terms of the product, you say you have a good product. What is it like on the airplane?

David: One of the great things, unlike the regional jets, the Dornier 328 has a 31 inch seat pitch and it’s similar to sitting in a 737 seat. I’m a pretty big guy and I’m 6’2″ and I can tell you that I can’t hardly sit in a window seat on a CRJ whereas in a Dornier 328 I can sit in a window and it’s very comfortable. The good news for travelers is that the creature comforts onboard are much better than what you get on a CRJ. We are going to offer complimentary snacks and soft drinks. Until we go long haul we probably won’t get into the meal service business. We do have a couple of ideas that we’re entertaining that would be unique. We’re just in the preliminary discussions so it would be premature to talk about it.

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And that was that. So, if anyone gets a chance to fly on these guys to Louisville, please let me know. Otherwise, I’ll be back to talk more about them when the Florida announcement comes out.

16 Responses to Vision Airlines Talks to Me About Its Plans (Across the Aisle)

  1. Ted says:

    “I think it’s safe to say, being a Louisville native, I know there is a large number of folks that will fly on Southwest from Louisville to Birmingham, rent a car and drive to Atlanta simply because of the high fares”

    According to the last 4 quarters of available data from the DOT, Southwest carried an average of 55 passengers per day each way between Louisville to Birmingham. So, let’s be aggressive and say that 75% of those folks drive to ATL – that’s about 41. Then, we’ll make the assumption that the brand power of Vision will be able to overcome the virtually unknown brand of Southwest Airlines and all of those passengers fly Vision. That’s still only a 64% load factor.

    That’s some quality planning right there – way to go guys!

    • bob says:

      You sit in judgement of a company that makes money and does extremely well. Hmmm and what is you do beside sit at a computer and make stupid remarks? I don’t think Vision would be attempting this if they didn’t have solid numbers. How many companies do you OWN?

  2. Oliver says:

    They have an interesting, uh, vision….

  3. Jared says:

    Nice use of the apostrophe in Hawai’i

  4. They aren’t a new airline, just one adding service between two points like any airline does now. Why the big deal just because it’s a DL only route to/from ATL.

    Back in the days of United, PSA, and Western all fly hourly service between SFO and LAX there was TWA with it’s one L1011 flight between the two cities each day. The lowest walk up fare in coach was $24 which was always available except during major holiday’s. UA, PS, WA didn’t care about TWA and their one flight for $24. They didn’t match that fare, they didn’t even match it for one of there flights that would be about the same time. Their walk up fare was $100 which is a big difference to people compared to $24. People would change their plans to fly TWA roundtrip for $48 or take us oneway and one of the others oneway if time was an issue.

    While the one TWA flight was mainly to connect people from the bay area to/from the LA-London nonstop, that $24 helped fill up the space. Now that is different from Vision flying only between SDF-ATL, but I only mention it because back then UA, WA, PS were not afraid that TWA with one flight in each direction was going to take all the SFO-LAX business. They had hourly flights and knew that was a bigger draw to travelers then TWA’s $24. So DL could think of Vision the same way and not even care since they have flights all day which will be a big draw to travelers.

    If DL was concerned of loosing business they wouldn’t have all those flights and would have lowered their fares already to keep people from flying WN to BHM and driving to ATL. But how many people fly just between SDF and ATL everyday anyway? I sure most of the DL passengers are only connecting in ATL so don’t even know prices are high between SDF and ATL anyway.

    • CF says:

      I think this is pretty simple. If Delta starts losing big corporate accounts to Vision on that route, it’s going to respond. (I don’t expect that’s going to happen.) If not, then Delta probably won’t care.

  5. What are the difference in pricing between the two carriers? I am sure they have a B/E price point with load. The Dornier is a good airplane, but most people are not aware of the equipment they fly or seat pitch so that becomes mute. Price, price, price… and only local SDF – ATL traffic.

    Wish Vision well as more competition is always a good thing. No mention of a loyalty program ex. fly 10 R/T get 1 free? Also handling of flight disruptions & customer protection? Will DL accept their pax?

    I hope this is successful, and maybe inspire others to the same. 62-64 seats does not break a market, but it is a start. It will be interesting to read about the FL service and how it may be executed. By following the Alliegant model they will have more than 90% load, really make the profit on the ground portion of the “tour.” So that makes some sense. Here is the question, isn’t the FL market saturated…MCO, TPA…where in FL…ECP?

    • CF says:

      Vision looks to be pricing itself at $99 to $199 each way ($198 to $398 roundtrip). The lowest roundtrip I see on Delta is $294 roundtrip. The lowest one way fare is $330.

      As for Florida, I’m sure there are still opportunities here if the right team can find them.

    • bob says:

      Thank you. Finally, one person on this blog understands business and competition. All airlines started somewhere and each one has had successes and failures in trying out different routes. It is a breath of fresh air to read a post by an intelligent person!

  6. What I’m curious about is if there was some downturn in their existing business that is pushing them to get into these new lines of business. It doesn’t seem like something you’d just hop into for the fun of it, unless you had to for some reason.

    • CF says:

      I get the feeling those Dorniers weren’t really doing much so they figured they put them to greater use. As for the 737s, they’re getting more of them so they probably figure this is a good way to try to utilize them. Not sure if business has been down or if they just think they can utilize the planes better.

      • bob says:

        What part of “We are not betting the company or the farm on this. We have Dorniers, we have pilots..” do you not understand? We didn’t put additional funds into this and our business is quite successful. This route will neither make us nor brake us!

  7. airwolf says:

    david said “Well Louisville – Atlanta is something we looked at as long as 6 or 7 years ago in terms of setting up a corporate shuttle for UPS. There’s been a need for a very long time. We’re probably personally familiar with it as a company because we have offices in Atlanta and a maintenance facility and offices in Louisville, Kentucky. So we as a company have experienced the high fares and limited service on that route.”

    then david said “Delta has 10 or 12 departures. We’re barely putting the number of seats that Delta has in the market on a regional jet. They’re the 800 lb gorilla and I’d be surprised if they respond to a 32 passenger Dornier. I’m not sure if it would be wise.”

    so is it underserved or not? i’d say not and the idea is a loser.

  8. travelnate says:

    Vision does a lot of business out of ATL for casinos and other groups – the planes have to reposition from SDF anyway. Maybe these flights are built in as scheduled repo flights, once they land in ATL they go do their flights for the respective charter flights, and go back @ night??

    When an airline can sell seats on their “deadlegs” or repositioning flights, its ALL found money :)

    • bob says:

      Another true and insightful post. Thank you. I guess some people on here actually do think and have some idea of what we are trying to do. I get upset over the negative comments because these people just don’t think beyond the narrow scope of their “box”. Most of them couldn’t insert plug A into outlet B without a blueprint!

  9. CAP-JACK says:

    I saw Cranky on Amtrak last week. I think he needs to get his head back in the clouds.

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