David Neeleman’s proposed start-up is racing to get in the air, and the timetable has recently moved forward to next year. How is he going to stand that up from nothing in such a short time? Maybe it won’t be from nothing. There just happens to be a perfect platform out there for Moxy (or whatever it will actually be called) to build on. It’s called Compass, and it’s an airline in need of a savior.
Moxy was expected to start in 2021 with new-build A220s, but Neeleman told The Air Current last week that he was looking at moving up to 30 Embraer 195s from his Brazilian airline Azul to Moxy so it could get in the air next year. That’s a stopgap measure until the A220s arrive, but it would get the thing flying sooner, if he can get everything done in that short amount of time.
Sourcing the airplanes obviously isn’t a problem. Azul is getting new Embraer E2s to replace its existing fleet over time. If David wants to move airplanes north, he can do that. But who is going to fly them? And what about gaining federal approval that quickly? Both of those are real issues that can be solved (at least, in part) by buying Compass.
Compass has quite the history. It was started by Northwest as a wholly-owned regional to operate 76-seat aircraft. The airline purchased the old operating certificate from Independence Air and started flying in 2007. After Delta bought Northwest, it sold Compass off to Trans States Holdings in 2010. It remains owned by Trans States to this day.
Right now, Compass flies only Embraer 175s. It has 20 operating for American and 36 for Delta, all out in the Western US. But those 36 airplanes flying for Delta? They’ll be gone within the year. Delta is consolidating its flying with fewer regionals, and Compass is out.
What’s not clear to me is just how long the contract with American goes. Compass started flying for American in 2015. It seems likely the agreement would expire in the next couple of years, though I unsurprisingly couldn’t get an answer from either Compass or American. What I do know is that American owns those airplanes outright, so when the contract is done, it can just take them and have another regional partner fly them.
Think about that. Compass will soon be an airline that is flying 20 airplanes it doesn’t own. That is not much to go on and growth prospects are limited at best. It doesn’t likely fit into its parent’s future plans either.
Trans States Holdings on the whole is, shall we say, in a state of transition. Outside of Compass, it has two subsidiaries. Trans States Airlines is the small Embraer jet expert flying 45 ERJ-145s for United. Then there’s GoJet which is the Bombardier, er, Mitsubishi expert. It too is losing its Delta flying with 27 airplanes going away, but it is seeing big opportunity with United. It is converting the 15 CRJ-700s it has under contract with United to the new 50-seat CRJ-550 configuration. It will be adding 35 more.
Trans States sure looks like a good candidate for consolidation. Just imagine United buying Trans States and merging it with ExpressJet… But I digress. The real point here is that United has no use for Compass whether Trans States Holdings is independent or not. (United already has ExpressJet, Mesa, and Republic, and SkyWest flying Embraer 175s.) So if I’m Trans States, I’m trying to sell that thing off for cheap to anyone who is even vaguely interested.
Neeleman prefers to start from scratch when he’s building an airline since culture is so important, but that takes time. Starting an airline is a lot harder than it used to be thanks to more stringent regulatory issues and a pilot shortage. He wants this thing flying by next year, and that means he doesn’t have the luxury of time. That being said, he seems undaunted. He told me through a spokesperson that he is getting his own certificate and not buying one. That means I’m probably just telling into the wind, but so be it.
Compass has a certificate, it has a roster of pilots who can fly E-jets but won’t be needed to fly the majority of them for much longer, and it has a parent company that should be motivated to sell. If I’m American, I have little problem ending my contract early and placing my 20 Embraer 175s with one of my other existing regionals since it has more partners than it needs anyway. In other words, if Moxy bought Compass, it would be good for everyone involved. It’s not often that kind of opportunity presents itself.