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ExpressJet Ending Branded Service with Full Planes
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Delta To Keep Pinnacle Flying
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The writing has been on the wall for quite awhile hasn’t it? In what has to be one of the most expected announcements in a long time, ExpressJet has now officially decided to end its branded operations on September 2.

We all know the story here. It’s fuel. I was a big fan of the idea behind ExpressJet from the beginning. There are opportunities out there for point-to-point service on smaller city pairs, but flying it as a brand new airline in 50 seat jets just didn’t work. I used to say that it might have worked as Southwest Express, because the power of the network would have helped significantly. With fuel above $4 a gallon, I can’t even imagine that working.

So, if you have tickets through September 1, you’re fine. In fact, you can still buy a seat on a flight until then. But after that, you’re going to have to call the airline for a refund. Hey, at least it’s a solvent airline that can actually refund your money.

At last check, there were 205 aircraft flying for Continental, 23 for Delta, 23 for the branded operation, and 23 for the corporate aviation group. We already know that they won’t be flying those 23 for Delta anymore, and now branded is gone, but they can only return 39 aircraft. This means that there will now be 30 planes flying for corporate aviation in addition to the 205 for Continental.

Anyway, I still think this idea can work some day, but we’ll need to see the price of fuel come down again. Next time, I’d probably try it with a Q400 turboprop or something, not that ExpressJet had that choice. This is a sad one for me, because I really liked flying the airline, and I think they had the right idea. It’s just the timing (and probably the airplane) that was wrong.

The writing had likely been on the wall for sometime, but it looks like Delta’s experiment in building up LAX is coming to a rapid end. Last week, Delta and ExpressJet announced that their agreement (covering 23 regional jets) would end on September 1. Something tells me we won’t see anyone else come in to fill their place.

The press release had plenty of hints at the ultimate plan for LA. Expressjet had been flying 13 aircraft under a prorate agreement (meaning they take all the financial risk), and I had fully expected those to disappear, but apparently the 10 other aircraft under the cost plus agreement will go as well.

Those 23 planes under the Delta brand had been flying mostly out of LAX and some out of Salt Lake. The release makes it clear that “Delta intends to award a portion of this flying, including all routes currently operated by ExpressJet at its Salt Lake City hub, to another Delta Connection carrier.” That doesn’t address how much of the LAX flying will be replaced, but I think it’s safe to say that the deafening silence says it all.

Many of the flights are already removed from the booking systems. Boise, Portland, and Reno, for example, are already out. Others show reduced flying still in effect, like a single daily Phoenix flight and some Bay Area flying, but most of those don’t have any seats for sale. If that’s the case this far in advance, that means they’re toast, but they just haven’t removed them completely yet. Of course, this also means the smaller Mexico markets like Leon and Torreon will disappear as well. The LA Times confirms that flights will drop from about 93 to near 60 by Labor Day.

It’s entirely possible that some of these will come back via another carrier, but that would really surprise me. This was just a failed experiment, and now it’s time to go back to where they were before. I’m sorry to see some of those Mexico markets go away, because I think they still might work one of these days. But they would have a better chance of working with someone like United or American with a larger local base here in the LA area as well as better connecting opportunities.

Now, I wonder what will happen to Delta’s physical presence in LA. This is a tough one. On one hand, they have a nice, functional terminal over in Terminal 5, but it will now go down to being severely underutilized once again. It would be nice to just bring Northwest over after the merger and fill out the terminal, right? Not so fast. Northwest has an equity stake in Terminal 2, and that’s a nice little asset that they might want to hold on to. Meanwhile, LAWA has to be excited at the prospect of opening up more gate space, but I’m not sure that there’s much they can do beyond working with Delta/Northwest to help them come to the right decision.

Wouldn’t it be nice for Delta to do the right thing here and make room for more airlines to come in? Yeah, right. I think we all know there’s slightly less than no chance of that ever happening. Maybe LAWA can find naked pictures of Delta’s CEO to help get them to move. It’ll be interesting to see how this gets resolved.

(Original LAX image from Flobrio)

I would be remiss to not mention the major cuts Continental announced yesterday. The airline will retire 67 aircraft by the end of 2009 that were not previous planned to go. I decided not to write much about that here, because the customer impact is simply fewer flights and I don’t have much other insight. If you’d like to read more, you can see what I wrote over at BNET about the impressive way they’ve gone about dealing with their employees. Over here, however, I’m writing about a situation that’s near and dear to many of my readers’ hearts . . . ExpressJet.

Just a couple days after ExpressJet said it would renegotiate its contract with Continental, the two airlines came to a wide-ranging agreement that has a lot of good news for both sides. Who are the losers here? SkyWest may be since they don’t get to buy the airline, but that may also have been fortuitous. Also, it won’t surprise me at all if the ExpressJet brand loses out completely, but nothing has been announced. Oh, and the shareholders may end up losing since the stock is still well below the $3.50 per share offer.

Still, I must admit, I’m surprised to see that ExpressJet has found its way out from between a rock and a hard place. How did they do it? Well, here’s what happens now:

• Continental guarantees to keep the same amount of planes (205) that ExpressJet currently flies for the airline for one year, and they get it for a lot cheaper (after one year, they can ditch 15 planes)




• Continental will take back 39 of ExpressJet’s 50-seaters that currently don’t fly for Continental and replace the more costly (on a per seat basis) 37-seaters, which will be grounded




• ExpressJet gets more flexibility in being purchased and in flying for other carriers




• Continental loses the right to terminate the agreement without cause




• All outstanding disputes between the two are settled

So, where does this leave us? Well, for Continental customers, nothing changes. You won’t have any more of those 37 seaters to fly around, but you’ll still be on ExpressJet for most of the Continental Express flights you take. For the customers that fly on the ExpressJet brand, however, it’s much less clear.

Currently, the airline flies 205 aircraft for Continental, 23 for Delta, 23 in Corporate Aviation, and 23 for the ExpressJet brand, according to an employee communication reposted here. ExpressJet will now return 39 of those non-Continental aircraft to Continental. So where will they cut? Where things aren’t performing well, of course. ExpressJet assumes all the risk of flying those 23 ExpressJet aircraft as well as 13 of the Delta planes. I have to think those will go away while the remainder will come from the Corporate Aviation group. In case you were wondering, at the end of 2007, there were . . . 39 planes flying under the ExpressJet brand.

From the airline perspective, Continental will save a bunch of money and be able to eliminate flying on jets with less than 50 seats, but they haven’t quite eliminated as many 50 seaters as they might like here. ExpressJet lives to see another day as an independent company and gets some security, but with the share price closing yesterday at only $1.95 (well below SkyWest’s $3.50 offer), shareholders may not be so thrilled. The airline is free to pursue deals with other airlines now, but unless someone else shuts down, I’m not sure who would really be looking for more 50 seaters right now.

My guess is that we won’t see any big changes until the Fall, but I wouldn’t be surprised to hear an announcement about their plans in the very near future. Expressjet is going to have to prove that this was, in fact, the right decision for everyone involved.

An interesting little merger attempt popped up on Friday that, as Holly Hegeman says, looks like a squeeze play. SkyWest has announced that it wants to buy ExpressJet for $3.50 a share.

The airline was hovering just over the $2 a share mark before the announcement, so this is a nice little premium. ExpressJet, however, thinks it’s worth more than that and has turned the offer down. It got more interesting on Friday afternoon when it came out that Continental is also behind this thing.

Continental hasn’t been happy with the relatively hight costs of the ExpressJet contract, and it has apparently told ExpressJet that it will remove 51 of the aircraft under contract beginning in December 2009. At the same time, it went and cut a deal with SkyWest on a broad new deal that will only go into effect if the takeover occurs. So, SkyWest buys ExpressJet and offers to fly for Continental for less. Continental tells ExpressJet that they either do it or they’re going to start walking. Wow, it sucks to be ExpressJet.

I have to think that if SkyWest wins, the ExpressJet standalone operation will probably be toast. That’s really too bad, since I’ve always thought it was a good idea. But with oil where it is right now, those 50 seat jets (and really, any plane in general) don’t look very good anywhere. And SkyWest probably will want to remain focused on the feeder operation, I’d think.

But why does SkyWest want a bunch more 50 seaters? No matter what the reason, I’m sure the ExpressJet guys are feeling very, very somber right now.

Poor ExpressJet. They’ve been trying to make their “branded operations” work, but they seem to be running out of time. As the months pass and they continue to lose money on it, shareholders will become more restless. The latest? Hayman Capital Master Fund.

Hayman owns just over 6% of the airline and they aren’t happy with the branded flying. They sent a letter to ExpressJet Chairman and CEO Jim Ream saying that they want the branded flying to immediately stop and they want an expanded, more stable relationship to be established with Continental. They also want the airline to look at potential buyers. Well, this is just some of the fun you get when you’re a public company. There’s not nearly as much tolerance for new ventures that don’t pay out quickly, and that’s too bad.

Why do I say it’s too bad? It looks like there might be some hope for this service in some areas. Just recently, the October T100 government data was released and that’s the first month ExpressJet was forced to release its information for their branded flying routes. You may remember they were fighting this for awhile, but they’ve apparently officially lost the fight, because we can now take a peak.

What we’ll take a look at here is seat factor, or the percentage of seats that were filled with people on each route during the month. For all branded flying, they had a dismal 59.0% seat factor for October. This is very close to the 59.1% load factor they publicly announced back in November, so we’re on the right track.

So what do we see? Of the 58 markets I found, 10 of them had a seat factor of better than 70%. The bad news is that 11 markets were at less than 50%. In other words, some of these appear to be working while others aren’t. I say “appear” to be working, because we don’t know whether all those people on those flights were paying enough money to make it profitable or not, but we do know that people are at least interested in flying those routes.

I can see why ExpressJet didn’t want to release these traffic numbers. I mean, it’s pretty easy to see which markets are worth considering for other airlines and which ones aren’t. The only thing is that most other airlines won’t be interested in flying in these markets. Southwest is the only one I could see really coming in to any of these, and with 737s that’s going to be a hard sell.

That’s why I think that ExpressJet could do very well if only they were Southwest Express. The connection to a large airline’s frequent flier program and access to passenger feed from a broader route network would be exactly what they’d need. Just look at the routes that are working here and you can see them fitting into the Southwest network quite nicely.

Unfortunately, I’m guessing we won’t see this happen, though it would be nice. For now, I’m just hoping that ExpressJet can find a way to tweak their network quickly enough that they won’t have to give in to shareholder demands to disband the network. Then again, flying 50 seat jets in the era of $90 fuel makes that an incredibly difficult task even with high levels of demand.

If you’d like to see the full spreadsheet with seat factor by market, click here. (I learned from my last post that you guys like the raw data.)

It’s been awhile since my last airline interview, so I’m happy to have another one to post. I started talking to ExpressJet about doing an interview a couple of months back, but I was only able to get enough information to justify a post recently.

See, they’re being quite guarded with their information these days, as you may have heard. I sent off a variety of questions and when I heard back from spokesperson Kristy Nicholas, most of them were answered with a “no comment” type of response. I did follow up with a phone conversation this week that gave me some more info, and that’s why I’m posting now.

For customers of the airline, there wasn’t too much to take from this exchange. A couple questions, however, did give a little insight.

Cranky: Your branded operation load factor ended up at 63.8% in August. That’s excellent growth from the first days of the operation, but it helped that it was the summer season. How are forward bookings looking through the Fall?

ExpressJet: We released traffic statistics on Thursday, October 11th that showed a decrease in branded flying load factor for September. However, we have recently implemented some system solutions that should enable travel agents more flexibility when booking ExpressJet. We are currently doing road shows in each city to educate them on these updates. We believe that these improvements will help generate a larger percentage of travel agent bookings in the fourth quarter.

As you can see, there was a lag between the time I asked the question and the time it was answered, so I hadn’t see October traffic numbers or 3rd quarter earnings when I asked the question. I think it’s interesting to see that they’ve really put a priority on marketing to the travel agent to get more bookings. That’s certainly different from what other carriers have done, and I tend to think this is a smart move for them. On less traveled routes like these, the travel agent community will probably be the most effective way to get the word out about their service. It may cost a bit more to acquire that traffic, but it’s worth it. So, if you use a travel agent, you might actually hear them mention ExpressJet’s name.

Cranky: After an initial burst of print and radio advertising, you’ve been relatively quiet, at least in the LA area. Can you talk about your current marketing strategy?

ExpressJet: We were busy developing our fall campaign that launched on October 9th. It includes radio, print and outdoor ads with catchy tag lines, including “get over stopovers”. The ads focus is our destinations and differentiating onboard product offerings, such as “no middle seats”, food and complimentary XM Satellite Radio®. Ultimately the message of the ads will remain the same – ExpressJet offers travelers time savings, comfort and convenience.

I also asked what sort of enhancements we’d see in their frequent flier program in the near future. It seems to me that they need to find some airline partners to make their program relevant in the world. It would be even better if they could get someone like to Continental to allow ExpressJet customers to earn OnePass miles. They weren’t able to give me any new information in that direction, but they say they are working on it.

Cranky: Lastly, it seems that participation in other frequent flier programs might help improve your ability to attract customers. Are there any plans to allow people to earn miles in other programs while flying ExpressJet?
ExpressJet: We are working on adding partners to our JetSet™ program and recently announced a Joy Ride Sweepstakes with Budget. We will continue to look for opportunities to offer travelers more choices that will make travel more convenient.

Other than that, most of our conversation revolved around the airline trying to petition the DOT to keep their traffic information private. I first asked this:

Cranky: On the flip side, what routes have surprised you by performing better than expectations?

ExpressJet: We don’t provide specific route information for competitive reasons and, as I’m sure you
know, we are in the process of requesting confidential treatment from the Department of Transportation to protect this information. So, probably prudent for me to stay “mum” on your question.

That led me down the road trying to find out more about this request, and that’s what my followup phone conversation was about. As Kristy noted during our conversation, this request is “unprecedented.” So far, the request has been turned down, but they are in an appeals process.

I couldn’t understand how they could make an argument that their data should be kept private when nobody else has that luxury. So, I asked them about their rationale here.

Kristy said that they wanted to keep the data private for “12 to 18 months” from the time they started up in order to “give time to develop the markets.” But that’s what every airline would want and nobody gets it, so why are they different?

Well, they say that their business strategy has been to “stay out of [other airlines'] hubs” and they are going into markets that have not interested other airlines in the past. She also pointed out that they had to start up all their new routes at once since they already had the airplanes, and that is not how they would have liked to do it. My interpretation of this is that they expect it to take longer for the routes to mature than normal and they don’t want competitors to see what routes are working for them just yet.

If I take this a step further (again, these are my thoughts only and NOT ExpressJet’s), they think that competitors will cherry pick the best routes and start flying them themselves. That would likely eventually drive ExpressJet out of the market, so they need time to build a strong enough brand that they could survive the onslaught.

I have to admit, I’m not surprised this has yet to sway the DOT. Nobody likes to share their data, but everybody likes to get the benefit of seeing data from other airlines. I can’t see how ExpressJet is going to get away with not participating just like everyone else.

The rest of the interview was more of the “no comment” types of answers I mentioned earlier, so I won’t bore you with it. Instead I’ll bore you with more of my thoughts.

Personally, I still like what they’re doing here as an airline. Some of these routes are going to work, but it does take time to figure out which ones those will be. We’ve seen some tweaking of the schedule already with Louisville and Corpus Christi disappearing and my home airport Long Beach, Reno, and Santa Barbara starting up. I can’t imagine they figured all these routes would work, and now is the time to start tweaking it. I just hope their shareholders either give them more time to make it work or they decide to go private.

I still don’t understand those people who compare this airline to Independence Air. They are so far from being alike, it’s ridiculous. Independence took their entire fleet and put it into a major airline hub in direction competition with that airline. They had ultra-frequent flights on routes that couldn’t support it, and they collapsed under their own weight.

ExpressJet has taken 42 planes, only 15% of its fleet, and put them into markets that have no nonstop competition. Most of the rest of the fleet is happily paying for itself with Continental. In addition, they are going with a low frequency model. I never thought Independence had a chance, but as I said, I still think ExpressJet is on to something here.

I was really excited about this trip for many reasons. First, my brother was graduating from medical school. Second, I was able to fly ExpressJet, a new airline for me (well, new if you don’t count flying on Continental Express). Third, it was the first time I’d ever flown in or out of Ontario. On top of all that, the trip was free. When I met with ExpressJet management a couple months ago, they offered me the chance to fly them if I’d be willing to give them a detailed review of my thoughts on the trip. I assume they knew I’d write a blog post as well, but that would only be a good thing if the experience lived up to expectations. Naturally, I jumped at the chance.

So, how’d it turn out? Overall, the experience was excellent, but Ontario is just too far for me to be worth it. For that reason alone, I’m unlikely to fly them again unless they start serving other nearby airports. I wish they’d pick up some commuter slots at Long Beach. Then I’d fly them any time.

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May 11, 2007
ExpressJet #25 Lv Ontario (ONT) 1030a Arr Tucson (TUS) 1148a
ONT: Gate 209, Runway 26R, Dept 8m Late
TUS: Gate 28, Runway 11L, Arr 9m Late
Aircraft: N13550, Embraer ERJ-145, ExpressJet colors, 100% full
Flight Time: 1h2m
Seat: 6C, Coach

As I said, Ontario is far. It’s 50 miles whether starting from my place or my girlfriend’s. Since leaving from her place would avoid traveling through downtown LA on a weekday morning, we decided to start from there. We left her place at about 8a and we were at the airport just over an hour later. And that was with no traffic at all. We parked in long term parking and took the shuttle in.

Since we had checked in online, we went straight to the security line. It was short, but it took awhile due to the very, um, inexperienced nature of the customers. People didn’t have their ID’s out, they didn’t take their shoes off, blah blah blah. Fortunately, we had plenty of time. The airport itself is very nice. We were in terminal 2. There is also a terminal 4 and that’s it. Terminal 1 is the old terminal that isn’t in use other than for tv and movies, I think. They have room for terminal 3 if they want to expand between 2 and 4.

We went to the gate and I walked up to the agent to ask if we could change seats (they don’t let you change seats online, booo). At the time, she was giving directions to Ontario to a customer on the phone! She said she gets all kinds of calls at the gate. When she hung up, I asked if we could change our seats and she said no (quite nicely), the plane was full. After I left, she wandered the boarding area tagging bags that would need to be gate checked, and then they started boarding.

Sure enough, the plane was full. They actually boarded 51 people to fill the 50 seats. Without boarding pass scanners, they boarded two people with the same seat assignment. After a lot of discussion and pleas for volunteers or employees to come forward, they found an employee who was hiding in the back, trying to avoid giving up her seat. Fortunately, they found her and we were on our way a few minutes late.

XM radio was on from the moment we boarded, and the flight attendant walked through handing out headphones. I thought it was rather odd that the boarding announcement (which was recorded) didn’t interrupt the radio. We took off quickly and went west for what seemed like a long time. Then we headed north before finally turning back around. Gotta love LAX traffic, I guess.

Service began quickly and the flight attendant handed out Sun Chips along with drinks. They have really nice heavy plastic cups (at right). The flight attendant was very friendly and helpful throughout the flight. In the end, she came by with a single biscotti and a mint for everyone. It was certainly some of the best service I’ve had on a short haul in a long time.

Now let’s talk about the seat. ExpressJet’s CEO Jim Ream kept bragging to us about the seats a couple months ago, so I made sure to pay close attention (at left). He talked about how they used memory foam and they were amazingly comfortable. Even with all that hype, I have to say I agree. The cushioning was fantastic. The seat bottom was very comfortable and the headrest was the perfect mix of cushy yet firm. These were far better than the seats on American last week. The only complaint? Those armrests are VERY skinny. It’s enough of a problem fighting your seatmate at normal width, but thanks to the size of the small cabin, I guess they couldn’t do anything about that. That’s unfortunate, because it is a problem.

We landed in Tucson and our gate checked bag was brought up very quickly.

---

May 12, 2007
ExpressJet #54 Lv Tucson (TUS) 235p Arr Ontario (ONT) 403p
TUS: Gate 28, Runway 11L, Dept 4m Early
ONT: Gate 209, Runway 26R, Arr 22m Early
Aircraft: N16559, Embraer ERJ-145, ExpressJet colors, 42% full
Flight Time: 59m
Seat: 3C, Coach

I knew there was no way this Saturday afternoon flight would be full, but we still arrived an hour before departure. We hadn’t been able to check in online because we had no printer access, so we went to the ticket counter and used a kiosk. There was a very nice grandmotherly figure working the counter, but despite her offer to help, we were fine on our own.

The security line was a mess here. There were three lines that led to two x-ray machines, but only one gate for passenger screening. As you can imagine, this caused confusion. Fortunately, it only took 10 minutes to get through.

As predicted, this flight was less than full with only 21 people onboard. We got to the gate to find the gate agent hanging out behind the podium talking to some rampers. That was the first and only complaint I had about an employee on the entire trip. And even that wasn’t really a problem, because nobody was up there trying to get help. Meanwhile, I was busy staring out the window at this beautiful view of our plane with the Catalinas in the background.

They boarded the flight 20 minutes before departure and decided to tag bags as we boarded. That made for a short backup at the jet bridge, but with only 21 people onboard, that wasn’t a big problem. That plane had been there for more than 30 minutes before we started boarding so I was surprised to see some trash from the previous flight still sitting in my seatback pocket.

It was also surprising that with a light load like this, there was no need to move people around for weight and balance. There were definitely a lot more people up front so I’m wondering if they were able to counter it with baggage loading in the back? Still, it was nice to not be asked to move to the back.

We taxied Southwest-style (fast) and were airborne quickly. It was a hot day in Tucson, and the thermals were bouncing us around to the surprisingly high altitude of 20,000 ft. Then it finally smoothed out and the service began. This time we were offered a choice of SunChips, granola mix, or peanuts. Since it was an afternoon flight, I decided to splurge and have another ExpressJet creation - the $1 beer. Tasty.

The rest of the flight was spent listening to XM radio and watching the great view out the window. We were in the bulkhead, and I wouldn’t recommend that seat again. The legroom is decent, but the tray table is so low and so close to your body that it makes it very awkward (resting on my leg at left). We landed very early and once again it only took a couple minutes for the bag to appear at the bottom of the jetway.

Overall, it was a great experience, with almost no issues. I hope that the chaotic handling of the 51st passenger on board the first flight was just an isolated incident. But other than that, it was excellent. As far as I’m concerned, I’d definitely fly them again . . . if they start flying out of a closer airport.

Today is the day that ExpressJet launches its first flights, and now the guessing game begins. Will they be able to pull this off? Initially, their flights didn’t get much of a competitive response from the other airlines, but a couple of challenges have trickled in to make this interesting.

First was American’s announcement that they would protect the Raleigh/Durham hub they abandoned years ago. American decided to put some 50 seat RJs of their own in Raleigh/Durham to Kansas City, Louisville, and Jacksonville (Florida). That goes head to head with ExpressJet. Unfortunately, I think we can all guess how this will turn out. Those are small markets in the first place and ExpressJet’s success was questionable without direct competition. Now that AA has decided to step in, I think it’s a safe bet that those routes aren’t to be long-lived. ExpressJet will probably not waste their time bleeding in the market for long and will pull their flights. Then AA will pull out soon after and Raleigh/Durham will not have the benefit of nonstop flights to those markets at all.

Meanwhile, up in the Eskimo cave, Alaska Airlines put together a response of their own using subsidary Horizon Air’s 70 seat RJs. It just came out last week that the airline will beef up its Spokane and Boise service in response to ExpressJet’s entry into those markets. Spokane will get a new daily nonstop to San Diego and a new second flight to Sacramento. Boise will also get a new nonstop to San Diego. Apparently, the airline is concerned that ExpressJet flights from Spokane to Ontario will be able to steal traffic from Alaska’s sole daily nonstop between Spokane and LA. Because of that, they’re pulling out the Alaska flight and replacing it with two Horizon 70 seaters. (Needless to say, frequent fliers aren’t happy about losing first class.)

I actually see this response a bit different than American’s. These are likely routes that have been on Alaska’s radar screen for some time. The ExpressJet competition may have moved the markets up the list, but they’re certainly markets that fit into the Alaska network well and that should help them survive. If Alaska does drive ExpressJet out, I would say there’s a much better chance of these routes sticking around in the Alaska system than the routes American is running out of Raleigh/Durham.  It’s probably safe to say that they never would have started these routes on their own.

I was lucky enough to be invited to a small dinner with ExpressJet President and CEO Jim Ream as well as VP of Marketing Trish Winebrenner on Monday night. The small group setting meant that I had plenty of time to poke and prod, and I must admit I like what I heard.

If you don’t remember my previous posts on ExpressJet, let me refresh your memory and give you a little more of the story. The airline was a wholly-owned subsidiary of Continental and flew only as Continental Express for years. They’ve since been spun off and are now branching out. Besides a new contract to fly as Delta Connection, they’ve also started a corporate aviation operation. Most interesting is the standalone operation under the ExpressJet brand that takes flight on April 2. This standalone airline (which is what I’ll be talking about below) will fly point to point services between smaller cities that don’t have service currently. You can catch my previous posts here and here for more details.

According to Jim and Trish every city that will see the new flights under the ExpressJet name has employees assigned to be evangelists for the airline. I guess that since Ontario is going to be their biggest operation, they sent the big guns out here. That’s good news for me, because I really enjoyed the dinner and had the chance to learn a lot. Let’s get down to business.

Flying on the RJ

I was happy to hear that they do understand that people don’t like flying regional jets for long flights. My longest on the plane these guys fly, an ERJ, was 850 butt-numbing miles of pure pain. And that was actually on an ExpressJet flight for Continental Express. Looking at their new routes, I see the longest appears to be Sacramento to San Antonio clocking in at just shy of 1,500 miles. Yikes! That’s about 75% further than my longest flight and the thought scares me.

With that in mind, I asked them what they were going to do to make this a better experience so people didn’t run away screaming. They responded with all kinds of plans, but the most interesting is that they’ve added memory foam padding to all the seats.

If you don’t know what memory foam is, think Tempurpedic. Or you can just look at the picture on the left and you’ll probably know what I’m talking about. I’m guessing it won’t be as cushy as that picture. As someone said at work, “no offense, but I don’t want to sit in your ass-print if I fly right after you.” Fair enough. I’ve been assured that the seats are extremely comfortable, but I will have to report back in May when I take a flight for myself.

Beyond just seat comfort, they’ve decided to make a higher service level part of their brand. XM radio will be added to every seat. I took one flight on AirTran after they installed XM and listening to ESPN radio definitely made the time fly, so I like this idea. They’ll also begin offering meals on longer flights (for purchase, I believe). There aren’t any ovens on these planes so they’ll be cold meals, but that’s not necessarily a bad thing.

Jim proudly announced that he came up with this extremely important service enhancement . . . a buck a beer. That’s right, there will be a whole selection of beers including domestics and imports and they’ll all cost $1. Wine is only $3. That’s definitely not as cheap as Horizon Air’s freebies, but it’s a lot cheaper than you’ll find anywhere else.

None of these things increase the size of the small cabin, but they could help bring the RJ experience closer to a mainline one. I’ll have plenty to report when I fly them in May.

The Business

As I mentioned in a previous post, the route map seemed to be full of some good decisions and other questionable ones. Jim was ready to admit that it’s unlikely that every single route will work. While on the whole they think they have a good network, they also reached for some longshots that they hope do pan out. If not, maybe the flights will work once a day instead of twice. If that doesn’t work and they feel they’ve given it their best shot, they’ll move on to something that works better. There are no sacred cows, and that’s a good thing.

This doesn’t, however, mean they plan on giving up easily if things aren’t working out. I also asked why they thought they could make a go out of routes from San Antonio that United has just tried under the Express banner and quickly ended. Jim said that they’re really putting a strong focus on marketing all of these flights in the local markets. While it’s difficult for someone like United (or express partner Trans States) to put a significant marketing effort into that small of a market, ExpressJet has the resources to do so. I don’t know if that will be enough, but I look forward to finding out.

One way they’re hoping to acquire traffic throughout the system is to be travel agent-friendly. You’ll currently find them listed in Orbitz and on the Worldspan global distribution system. They’re working on the other reservation systems as well. I was really surprised that in the little collateral packet they gave out to us, there was a paper sign-up form for the frequent flier program. It had specific instructions for travel agents to help sign clients up. You don’t see that too often anymore.

The Wrap

Ultimately, there are two things that concern me most about ExpressJet’s prospects.

First, I worry about their lack of frequency. It’s true that you can fly ExpressJet twice a day from Ontario to Kansas City nonstop and once with a single stop, but you can also fly with one stop on Southwest 7 times a day. Having that many more options, even when a stop is required, is likely to make it difficult for ExpressJet to get a large share of traffic. Jim countered by saying that it’s all about having flights at the right times. Knowing the market can’t support multiple daily nonstops means you have to pick and choose the times that are going to best serve the market.

With that in mind, I decided to break down Ontario to Kansas City even further to see what I thought about the strategy. Here is a schedule comparison of Southwest and ExpressJet for random Wednesdays in May.

It’s really interesting to note that ExpressJet’s flights stack up well in all but one time slot throughout the day. Southwest may have many more flights, but ExpressJet seems to have done a good job of lining up each of its flights to be viable options against two or more of Southwest’s flights.

My second concern is about the frequent flier program. These guys have a simple program modeled on Southwest’s program, but it won’t be enough to compete against the big guys’ programs. To make the program truly valuable, they’d need to start partnering with other carriers to offer stronger benefits to frequent fliers. Trish tells me that they’re discussing partnerships as we speak, so hopefully this concern will go away with future developments.

In short, I like what these guys are doing. It’s really a different type of model than we’ve seen in recent memory, and it provides a lot of great new air options to people in smaller cities. Since most of their fleet is still in profitable relationships with Continental and Delta, they really will be able to take some time to turn this into a success. If they can keep up the high service standard and run a good on-time operation, this could really pay off.