My long weekend of rest continues. As I mentioned last Thursday, it’s been a really difficult few months, and I need a couple days to recharge. So, instead of going dark on the blog, I’m publishing two posts that I was working on back in March. Once the wheels fell off the industry almost overnight, these posts seemed, at best, out-of-date. But I still think the underlying information is interesting, so here’s the second one. I’ll be back tomorrow as normal.
Just remember when you read about pilot shortages that this was written before things fell apart.
I briefly mentioned Contour Airlines a couple weeks back, but now it’s time to really dive in. Who are these guys? And will they be able to succeed where so many others have failed?
Contour is really a combination of strategies employed by Via Air, Southern Air Express, JSX, Expressjet, Allegiant, and even OneJet. That’s a long list of airlines with few successes, but Contour actually has taken the bits of pieces of each that might lend themselves to a sustainable future. In a phone interview, the CEO Matt Chaifetz told me that after a couple short years, the airline is now profitable.
But Contour didn’t start as an airline in the traditional sense. You might recognize the name Corporate Flight Management. That is the same exact company. CFM has been around for decades with a focus on maintenance and charter work. You may have heard the name when it was actually operating aircraft for both Glo and OneJet. But it was just a few years back that it decided to get into the game on its own as an airline under the Contour brand.
Contour picked the Embraer 135 as its aircraft of choice. These airplanes were great for one reason… they were dirt cheap. Nobody wants an EMB-135 anymore, and that meant Contour could pick them up for nothing. It also has acquired EMB-145s since the economics aren’t much different despite being slightly larger.
Unlike Via, Contour wisely decided to operate all of these airplanes with only 30 seats onboard. It’s not often that I advocate for an airline to chart a path to success by reducing density, but this is a special exception. Having only 30 seats means Contour could fly under FAA Part 135 instead of FAA Part 121. This is the same thing JSX (formerly JetSuiteX) has done, but unlike JSX, Contour isn’t investing in making the airplane fancy inside.
Part 135 is the only way to run a small airline these days, because it is the only way an airline can actually find pilots. See, Part 135 operators do not have the same restrictions on pilot recruitment. They can have less than 1,500 hours and they can be older than 65. Consequently, Contour can actually recruit seasoned captains who were forced out of the big guys due to age while also getting its pick of the litter of first officers with limited time. As long as Contour keeps its airplanes with 30 seats or less, then it can operate this way.
Like Southern Air Express, Contour has opted to build its network on top of the government’s Essential Air Service (EAS) program and then expand from there. If you look at the airline’s route map, you can pretty quickly see which routes are EAS-supported.
Contour got its start flying from Nashville (near its Smyrna home) to Tupelo. It has expanded from there into a variety of EAS markets all over the country. The spread of routes always concerns me, but for an airline that handles much of its own maintenance and does charters, it’s less of an issue operationally.
The first build-up of non-EAS routes began in the west. Crescent City to Oakland was extended further down the coast and then over to Vegas. With Phoenix to Page on the map, the airline could start connecting all the dots.
Unlike JSX, Contour’s strategy is to fly on routes with no service today. If this sounds Allegiant-like, it is. Fly cheap airplanes with low ownership costs on unserved routes. The difference is that Contour is trying to actually operate in business markets. Most of these routes have double daily service to allow for day trips.
Let’s take a look at Santa Barbara to Las Vegas in more detail. Beginning in the last quarter of 2018, service has steadily built in the market. In the most recent quarter of government data, Q3 of last year, Contour filled more than 70 percent of its seats (21 to 22 per flight) with a $139 fare in the local market. (It also took some connections beyond, but not a ton.) That’s not bad.
Even some of the larger gambles seem to be working. Baltimore to Macon (GA) — the longest route in the airline’s system — is not a route you’d think would draw much traffic, but in Q3 2019, Contour filled more than 81 percent of seats at a $177 fare for its double daily flights.
Now, Contour’s growth has jumped to the Midwest. It still has that EAS contract for Nashville to Tupelo along with St Louis to Ft Leonard Wood. Naturally, it wanted to connect the dots, and Indianapolis won that battle. The airline is settling into routes that OneJet tried previously, but Contour offers a lot more seats at a lower fare. New flights from Indianapolis to St Louis, Nashville, and Pittsburgh may just be the beginning.
One thing that Contour seems to understand that others (*cough* Via *cough*) didn’t is that running a good operation really matters here. At least, that’s how the CEO explained it to me. I don’t have any recent hard data on that.
The airline hasn’t taken outside money yet, so it can grow slowly and deliberately. It has 11 operating aircraft now, but it keeps some as spares to ensure reliability. With airplanes being so cheap to acquire, it can afford to do that while it builds trust with customers.
Contour operates from terminals, and travelers can get TSA Precheck. The airline seems to like the idea of operating through standard channels, unlike JSX. That type of thing has enabled it to start up an interline agreement with American.
The company is profitable overall, but now Matt tells me that even the airline is profitable on its own. If that’s the case, and if Contour can continue to grow slowly and smartly, then it has a chance of being an actual long-term player in a world where airlines come and go all the time.