Spring break! I’m off next week, and while I usually try and pre-write posts when I’m gone, I’ve decided to stop trying to kill myself in that effort and instead just go dark.
After tomorrow’s Cranky Weekly Review, there will be no post until next Friday’s Cranky Weekly Review. I’ll be back either the following Monday or Tuesday depending upon how much time I have to write.
Like many smaller cities, Lincoln (Nebraska) has had a rough go when it comes to air service. Back in 2005 it had more than 300,000 departing seats on two airlines with a third arriving in 2006. This year, it’ll be lucky to clear 130,000 seats on one, lonely airline. For that reason, the local government is ponying up the cash for a big revenue guarantee to bring in a new public charter operation. The chances of this being an unqualified money-maker are low, but faced with limited options, Lincoln Airport (LNK) decided this was worth the risk.
The decline of air service at LNK mirrors the plight of many small cities around the country. Just look at this depressing chart.
Lincoln Departing Seats by Month and Destination
In 2005, United was in the market with service to Chicago and Denver while Northwest had flights to all three of its hubs in Detroit, Memphis, and Minneapolis/St Paul. After the merger, Delta would keep service to both MSP and Detroit while trying Atlanta and Salt Lake at various times.
In 2006, Allegiant came into the market from Las Vegas, but that only last three years before ending. By 2010, service levels had plunged, and Lincoln would stay relatively flat until the pandemic and the pilot shortage that came with it.
Delta’s last flight was in January 2022, leaving only United in the market. This summer’s current plan is for 1x daily to Houston/IAH, 2x daily to Chicago/O’Hare, and 3x daily to Denver. Except for 2x daily to Chicago on Embraer 175s, all other flights are on 50-seat regionals.
And that Houston flight? That’s being funded by a $750,000 grant from the feds along with $500,000 in local matching funds. Keep that number in mind, because this is one reason why LNK decided to get behind this Red Way plan.
I spoke with both David Haring, Executive Director at LNK, and Rachel Barth, Director of Communications and Customer Engagement, about this plan as well as Nickolas Wangler and Sarah Riches who are behind Fly Next LLC, the newly-formed company putting this all together. You know, maybe a chart will help show how this works, and frankly, I’m not sure this is even fully right.
LNK has spent years trying to boost local service levels, but that’s been almost impossible as of late. Part of Lincoln’s problem is out of its control, knowing that there is a pilot shortage that is wreaking havoc on regional operations. This is what ultimately pushed Delta to leave the market. But part of this is also that Lincoln is not a big place, and it is far too close to Omaha.
Yes, the Omaha airport is on the far northeast side of that city, as far as possible from Lincoln to the southwest. But it’s still only 60 miles… and an hour drive. When options are that close to each other, airlines can prioritize putting airplanes elsewhere. And they have.
The city of Lincoln, Lancaster County, and of course the airport do not like any of this. In fact, flush with cash from COVID relief, the county has dedicated $3 million to the pursuit of more air service. LNK has taken that money and offered it as a revenue guarantee to Fly Next LLC, a company which was formed by Nick solely to build out this plan.
Apparently David and Nick have known each other for a long time. Nick was involved with Allegiant in the early years, but today he consults with 10 other airline clients around the planet helping with these types of arrangements and run their commercial functions. He says some of his biggest clients are 737 operators, so this isn’t a big leap for him operationally. The only thing that’s different is that Nick usually operates in the background. This time, he’s in charge of building a brand. That’s where Sarah comes in.
When LNK started putting this together, the airport did some math. It had already put over $1.2 million into just getting that Houston route, and while it’s appreciated, it’s still the same high fare, hub-focused service they already have from United. Lincoln is a college town, and many students have a hard time paying legacy carrier monopoly fares, so they just drive to Omaha.
In this new plan, LNK is able to commit just a little more than double that amount in revenue guarantees, but Nick says the “model that we’ve built out says we shouldn’t have to touch that money.” (As all models do….) LNK, however, will get flights all over the country to the places where it wants to go, and that’s how the plan for Red Way was hatched. To start, those airplanes will go to, well…
Service starts in June, and flights will not operate daily. The plan is:
- Atlanta – 2x weekly, rising to 3x weekly after Labor Day
- Austin – 2x weekly through Labor Day, then suspended for season
- Dallas/Fort Worth – 2x weekly, rising to 3x weekly after Labor Day
- Las Vegas – 2x weekly
- Minneapolis/St Paul – 2x weekly, rising to 3x weekly after Labor Day
- Nashville – 2x weekly through Labor Day, then suspended for season
- Orlando – 2x weekly
With 28x weekly flights to start, this is going to have to sink or swim pretty quickly. LNK’s contract with Fly Next will allow the company to dip into the revenue guarantee funds to cover any shortfall for up to $30,000 per flight domestically. With $0 in revenue, this would burn through the funds in a month. Obviously this needs to get traction relatively quickly or the money runs out. Either party can get out of the contract with 30 days notice, so there is nothing set in stone here. It’s one big experiment.
The infrequent service to multiple markets is certainly designed more for the leisure focus, so it is different than anything LNK has seen in a long time. What’s interesting to me, however, is that while LNK can make suggestions on where it would like to see flights operate, it’s Fly Next that has complete control of the network and revenue management functions. Fly Next has said it is focusing on building a network that will “fly to the peak markets at the peak time of the year.” That’s why you see a shift in which markets are served after Labor Day.
We don’t have much to look at yet, but Nick explained that he’s built out a model for how every day needs to look until launch and the first four days of sales exceeded that. Of course, once the buzz dies off, that’s when it gets tougher, but Sarah is bullish. They’re particularly excited at the idea that unlike Allegiant, they only need to focus on the LNK market and not all the different spokes. This is going to sink or swim based on demand in Lincoln. To help with that cause, they have $225,000 in marketing funds from airport, which are available to any new entrant (it’s actually $75,000 per new route with a cap).
Nick thinks that this is the model that will be a “catalyst” for others to do the same. I remain highly skeptical that it’ll work, but since I have nothing at stake here personally, I like to see others testing the waters.
I asked David if he would consider it a success if this new airline failed, but it proved the opportunity enough for Delta to come back to the market. He thought about that for awhile and ultimately decided no, it would not be a success. He sees a real need for that low-cost leisure service that tends to appeal to a penny-pinching college crowd. While he’d love to see Delta return, he has bigger ambitions.
In the end, I got the feeling that there was a mix of desperation and exasperation here. Small airports have almost no ability to move the needle on air service these days thanks to the pilot shortage and a variety of other issues that have shrunk regional flying in this country dramatically. LNK wanted to do something to try and change its situation, and it has done that. Now, we wait.