ExpressJet boss scoffs at comparisons to Flyi

 - March 8, 2007, 4:33 AM

Houston-based ExpressJet joins some pretty rarefied company this month when it begins flying 44 Embraer ERJ 145s under its own colors in a point-to-point “spider web” network of 24 cities ranging from Monterey, Calif., to Raleigh-Durham, N.C. The new operation marks the second attempt in the last few years by a regional airline to set out on its own after failing to reach terms on code-share contract concessions with its mainline parent.

One might think the recent failed attempt by the now defunct Independence Air [dba Flyi] to fly 50-seat Bombardier CRJs without the benefit of a mainline code-share partner would serve as a highly cautionary tale. But ExpressJet CEO Jim Ream insists that the similarities between the two begin and end with the size of the airplanes in question.

“Everything else is completely different from what Flyi tried to do,” said Ream during a presentation at last month’s Raymond James Growth Conference in New York. “Operating out of a major metropolitan area and then [flying] service back into other major metropolitan areas in a high-density service pattern with a small aircraft, [that] was obviously going to elicit a lot of competitive responses.”

In fact, ExpressJet’s new network barely touches the part of the country where Independence projected its biggest presence. According to Ream, each of the new routes will account for the only direct service between the cities getting the service. ExpressJet will also not make the mistake–in Ream’s estimation–of applying a low-fare distribution model under which Flyi tried to sell tickets exclusively over its Web site.

“Most of the airports where we’re operating we have one gate, but the utilization on that gate is sort of 10-plus departures,” said Ream. “Obviously we have the economic advantage of having a single fleet type, but still modeling the service levels in a way that matches this aircraft to the demands of the market. Obviously from a distribution strategy, how we sell tickets under Continental Express is what we’re going to do with this airline…because there’s nothing worse than an empty seat on a small aircraft.”

Ream insisted that the plan to fly as an independent airline did not come about solely as a reaction to Continental’s decision. “We’ve been looking at this for several years,” he said. “This is not just something in response to the 69 aircraft being released; we wanted to get back into the airline business. We think it makes sense for us to establish relationships in these communities.”

Over the long term, the thinking goes, stablishing those relationships could give ExpressJet an advantage when competing for other code-share deals. In fact, Ream said ExpressJet will soon sign a contract with another major airline to fly the remaining 10 ERJ 145s released by Continental. Of the 69 airplanes in question, ExpressJet has dedicated 15 to a new corporate charter business, which, Ream said, would see operations increase from 300 in January to an expected 900 last month.