Across the Aisle from ExpressJet

Across the Aisle Interviews, ExpressJet

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.

07_11_07 acrosstheaisleexpressjetSee, 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.

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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.

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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.

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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.

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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.

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10 comments on “Across the Aisle from ExpressJet

  1. Pingback: Loren Steffy
  2. I really, really, REALLY wish this was not a publicly traded company. Where as other companies nurture their routes before going public (while others don’t go public at all), ExpressJet was a public company before it had to alter the business plan. I wonder if it is even possible for them to retreat back public trading?

  3. I wish them well, myself. I live in Reno, and they’ve been advertising like crazy here for the non-stops they’re about to start next week RNO-LGB, RNO-ONT, RNO-GEG, and RNO-TUS. My guess is that RNO-LGB/ONT will take off, the other two won’t last.

    It’s interesting though that they didn’t work out a deal with CO or DL to at least try to link their brand with them. Skywest does “at-risk” flying (in which the cost of the flights is not covered by the contract with UA) under UAX’s banner up in Northern CA and the Pacific northwest; perhaps CO and DL don’t have any interest in that type of arrangement?

  4. Bradley – They can certainly go private again. Midwest just did it. You get a private equity group to come in a set up a buyout for all outstanding shares. I’ve heard their considering it.

    Alex C – Believe it or not, ExpressJet actually does at-risk flying for Delta out of LA. There are probably two reasons they aren’t flying under another airline’s brand for these operations. One is that the routes don’t fit in any other airline’s route network, so they don’t really add that much. Two is that ExpressJet would then have to share revenue on that flight with the other airline and they may have thought they could do better on their own.

  5. Alex C – I’ve been thinking about your comment, and I have to agree with you more and more. They really should have tried to fly this under someone else’s brand. It would have given them better access to the reservation systems, better frequent flier benefits, and an easier branding opportunity. That would have to be worth the money they’d have to hand over to make it happen.

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