Entrepreneur plans ‘breakthrough’ regional

 - January 9, 2008, 4:22 AM

It doesn’t have any airplanes. In fact, it doesn’t even have a name yet. But Matt Andersson has nevertheless announced the intent of his company, Aviation Development Holdings, to launch “a clean-sheet, breakthrough regional airline jet service, independent and decoupled from the major airlines.”

The launch comes after a year-long, independent feasibility study dubbed “Project Mint.” “It was obvious that the old business model for an airline doesn’t work anymore,” said Andersson. “Something’s wrong, and the airlines are doing nothing to solve the problems. So we started Project Mint.”

The study–conducted by A.T. Carney of Plano, Texas, with assistance from Embry-Riddle Aeronautical University’s Prescott, Ariz. campus–considered a variety of old assumptions, such as hub-and-spoke operations, cost structures, the wisdom of ownership by the airline of supporting facilities and equipment and how the benefits of business aviation could be applied to an airline operation.

The intent of the study was to “solve the underlying structural problems of the airline industry,” and Andersson believes the result will be “the airline of the future.”

As yet, no decision has been made on a specific launch aircraft, though Andersson has stated that it will definitely be a Stage 4-compliant regional jet. Service is expected to begin in the second quarter of this year with four aircraft initially.
The obvious aircraft choices are the regional jets being produced by Canada’s Bombardier and Brazil’s Embraer. Andersson added that while the future of Fairchild Dornier remains in doubt, “We’re not ignoring that possibility.”

More important, he sees the manufacturer of the aircraft, and engine manufacturer, as risk-sharing partners in the airline. This kind of partnership, said Andersson, is critical to the economic future of airlines. As part of the risk-management agreement, he added, “We’re looking for a ‘tip-to-tail’ package from both the OEM and the engine manufacturer that would reduce our capital costs and increase the aftermarket revenues of our partners.”

Legroom on the aircraft would be the equivalent of business-class seat-pitch on scheduled carriers, and emphasis will be placed on getting passengers on and off the aircraft quickly and comfortably. Cabin attendants would be on board to meet FAA-mandated safety requirements and to assist with arrivals and departures, though refreshments and snacks would be self-serve.

Based in Phoenix, the airline would operate independently, “decoupled from the major airlines.” The hub-and-spoke concept would be discarded in favor of direct routing. And rather than deal with the congestion–airplane and automobile–at major airports in the larger cities, the airline would take advantage of conveniently located, smaller reliever airports. “The emphasis will be on cutting the door-to-door time for the passenger,” said Andersson.

Initial cities served would include Los Angeles, San Francisco and Salt Lake City, which he described as the boundaries of a “geographic box within which we find the highest per-capita incomes in the country, the highest concentration of business travelers and the highest level of frustration with poor service by scheduled carriers.” Other cities might later include Reno and Las Vegas, and “possibly some more important leisure and seasonal markets, such as Aspen, Santa Fe and Cabo San Lucas, Mexico.”

Backing for the feasibility study has come from “several private investors,” said Andersson. The intent, he added, is to launch the airline fully financed with a minimum funding level of $23 million.

Ticket pricing is expected to be competitive with Southwest Airlines. In fact, said Andersson, we like to think of ourselves as “a Southwest Airlines for the business traveler.”

Andersson is the founder of Indigo, a “frequent and regular” business jet service based in Chicago and flying Falcon 20s linking Midway Airport with Teterboro (N.J.) Airport and Westchester County Airport north of New York City. He no longer has an active role in Indigo and is now devoting “the great majority” of his time as Aviation Development Holdings chairman and CEO to launch the new airline.