Tuesday, May 1, 2018

A business-jet startup is going after travelers that big airlines left behind


The founder of small, startup carrier OneJet is banking that a decade of mega-mergers among U.S. airlines has left it with perfect conditions to compete.

The airline started flying three years ago, going after business travelers for companies like FedEx in mid-size cities that large carriers pulled back from following the wave of consolidation.

Now it's trying to grow, taking a page from the playbook of some of the bigger airlines in purchasing another carrier. OneJet is buying a Ultimate Jet Charters, a corporate shuttle service based in North Canton, Ohio, it said Tuesday.

OneJet, which has a base in Pittsburgh, is a some 180-flight-a-week operation. It flies seven-seat jets, and is transitioning to larger 30-seat used Embraer E135 aircraft, said CEO Matthew Maguire. He said this will help the operation grow to some 400 weekly flights by the end of the year. Maguire declined to say how much the company is paying for Ultimate. Together they will serve at least 17 cities.

Competing with large carriers isn't easy. Four carriers control some three-quarters of the U.S. market. Corporate travelers often book on big airlines that offer the most flights and flexibility because their plans change so often.

But Maguire says his airline is focused on nonstop service between smaller cities that lost service but still have business travelers who may not want to spend the time connecting through larger airlines' hubs.

Flight schedule data from Oliver Wyman's Planestats.com show some airports that OneJet flies from have lost service over the last decade. Seat availability based on June schedules from Cincinnati is down 35 percent from June 2008, while it dropped 18 percent from Milwaukee over the last 10 years.

A one-way ticket in May from Milwaukee to Pittsburgh on OneJet costs about $200 on the company's website, which says it takes about an hour and 10 minutes. It's about $60 cheaper on United but the trip takes more than three hours because it has a stop in Chicago.

The airline's operation hasn't been without its challenges. It recently announced it was dropping its Milwaukee-Omaha route due to low demand. "You can only serve so many routes," Maguire told CNBC.

And some reviews featured complaints about cancellations.

"Certainly, when you're growing an airline, there are growing pains," Maguire said, adding that he expects the larger, used Embraer jets to be more reliable.

OneJet isn't the only upstart that's wants to scoop up well-heeled passengers in smaller airports. JetBlue has invested in JetSuite, and is selling seats abroad its scheduled West Coast charter service JetSuiteX.

On Tuesday, Delta Air Lines said it was expanding its booking platform for its private-jet arm, Delta Private Jets, to allow travelers to book so-called empty-leg flights, when a plane is repositioned to a destination where a customer has already booked a flight.

(Leslie Josephs - CNBC)

No comments: