Scheduled charters a growing air service

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Photo Credit: Illustration by Golden Sikorka/Shutterstock

In 2009, Akron, Ohio-based Ultimate Jetcharters faced a dilemma. Fallout from the country's worst financial crisis since the Great Depression had cost the on-demand corporate shuttle operator three important bank clients.

In an attempt to make up that revenue, the company decided to put one of its 30-seat, Dornier 328 aircraft to work in a new capacity. In July 2009, Ultimate began offering scheduled flights from Cincinnati to Morristown, N.J., about 40 miles west of Manhattan, at $540 roundtrip.

The flights were a hit, and Ultimate Air Shuttle was born.

Today, Ultimate Air operates 60 roundtrips a week between its hub, Lunken Field, a public airport in Cincinnati, and Morristown, Chicago, Charlotte and Cleveland, said managing director Rick Pawlak. Ultimate plans to add Atlanta service by the end of September and is mulling over roundtrips from Cleveland to Morristown and Chicago, as well.

"We want to emulate in Cleveland what we did in Cincinnati," Pawlak said. 

The key to Ultimate's business model is that it flies out of private terminals, which customers can reach without the hassles of parking in large garages, waiting in line for Transportation Security Administration (TSA) security screenings or time-consuming walks through the airport.

Indeed, while passengers flying standard commercial airlines are often asked to show up two hours before a scheduled flight time these days because of the possibility of long security lines, Ultimate Air passengers can breeze into the terminal 15 minutes before the actual takeoff. Though Ultimate does TSA background checks, its passengers don't have to go through security at all. And once the plane is boarded, there are no long waits on the tarmac.

Scheduled charter Ultimate Air Shuttle has 60 roundtrip flights a week from its hub in Lunken Field in Cincinnati. Its passengers can avoid Transportation Security Administration hassles.
Scheduled charter Ultimate Air Shuttle has 60 roundtrip flights a week from its hub in Lunken Field in Cincinnati. Its passengers can avoid Transportation Security Administration hassles.

A new service niche

Ultimate Air is not alone in offering such services. Rather, it's one of several players in the still nascent but nevertheless growing air service niche known as scheduled charters. Business models within the sector vary, but they all blend the comfort of private flying with the convenience and relative affordability of regularly scheduled and shared routes.

Central to the model is the use of private, fixed-based operator (FBO) terminals where customers can easily drive and that are free of TSA security lines. Scheduled charters also fly small aircraft, though the size varies from just a handful of seats to as many as 30, which is the maximum allowed by the FAA under the carrier license such airlines use.

In all cases, scheduled charter companies market comfort, including legroom that is at least comparable to what first-class passengers would experience on a typical commercial domestic flight. Some carriers have greeters at their lounges. Food, beverages, cocktails and WiFi are typically offered at no extra charge. And tickets can be changed or canceled with no penalty up to a day or two before flight time.

The routes tend to link frequently connected commerce centers, such as Boston and New York, or go between wealthy areas and pricey vacation locales. They also fill city-pair vacuums abandoned by the major carriers as commercial airlines have consolidated their hubs. For example, moves in recent years by United to close its hub at Cleveland Hopkins airport and by Delta to dramatically downsize its operations at the Cincinnati/Northern Kentucky airport led to both carriers dropping flights between the two Ohio cities. Ultimate Air Shuttle is filling that void.

Ticket prices on scheduled charters typically exceed what one would pay for standard commercial service, but they can be competitive with business-class prices. In fact, in the case of last-minute flying, they sometimes offer savings.

The Tradewind Aviation lounge at San Juan Luis Munoz Marin International Airport, one of six Caribbean markets it services.
The Tradewind Aviation lounge at San Juan Luis Munoz Marin International Airport, one of six Caribbean markets it services.

Small is the new big

Some analysts say the charter shuttle market is primed to continue its expansion.

"I've been saying for a while that small is the new big," said travel industry analyst Henry Harteveldt of Atmosphere Research Group, who referenced the rising cachet of boutique hotels. "These airlines are part of that small-is-the-new-big trend."

Venerable by the industry's standard is Tradewind Aviation, which began offering scheduled shuttles between wealthy Westchester County's airport in White Plains, N.Y., north of New York City, and Nantucket, Mass., in 2002. The carrier has since expanded its Northeast route network to Teterboro, N.J.; Boston; Stowe, Vt.; and Martha's Vineyard, Mass., and in 2006 it added a Caribbean network that caters to six markets with a focus on the ritzy island of St. Barts.

It flies eight-seat Pilatus PC-12s and ticket prices generally range from $400 to $600 per leg, said company vice president David Zipkin, though many regular customers purchase ticket books that bring the price down. Zipkin said Tradewind has grown 40% year-over-year in the last 10 years.

The interior of a Surf Air plane for intra-California flights.
The interior of a Surf Air plane for intra-California flights.

A more recent player in the scheduled charter space is the intra-California carrier Surf Air, which launched in 2013 and offers up to 90 flights per day between 12 Golden State markets.

Rather than charge by the flight, Surf Air uses a membership model. Customers pay $1,950 per month for unlimited flying on its fleet of eight-seat, Pilatus PC-12 aircraft. The airline is run by Jeff Potter, a former Frontier CEO who compares Surf Air and scheduled charters in general to other disrupter business models, such as the ones created by Uber and Airbnb.

"Eighty to 85% of our members, their primary mode of transportation before joining was the commercial carriers, but not even just business class," Potter said. "The most common carrier was Southwest, which doesn't have a business class."

Potter said Surf Air plans to commence a Texas network by the end of the year, as well as begin operations in Europe, though he didn't say where. A Florida operation is also in the offing, he said.

Also following the membership model is the scheduled-charter carrier Rise Airlines, which is offering 60 scheduled flights per week between Dallas, Houston and Austin, according to its website.

JetSuiteX has been able to purchase its Embraer 135 planes at a discount for flights from Burbank, Calif., to Concord, Calif., and Las Vegas as well as a San Jose, Calif.-Bozeman, Mont., route.
JetSuiteX has been able to purchase its Embraer 135 planes at a discount for flights from Burbank, Calif., to Concord, Calif., and Las Vegas as well as a San Jose, Calif.-Bozeman, Mont., route.

Other companies are entering the market. In April, Alex Wilcox, a former JetBlue executive, broadened the private-charter company JetSuite by adding JetSuiteX, which has begun flying scheduled routes between Burbank, Calif., and Las Vegas and between Burbank and Buchanan Field near the wealthy East Bay community of Concord, Calif. Service between San Jose, Calif., and the vacation community of Bozeman, Mont., started on June 30.

JetSuiteX, which flies 30-seat, Embraer 135 aircraft, began operations with introductory fares as low as $109 each way. Longer-term plans call for fares that average around $220 each way, Wilcox said. And while initial sales on the Buchanan Field route haven't met expectations, sales on the Las Vegas route have.

"Burbank-Vegas is off like wildfire," Wilcox said.

Also brand-new to the scheduled charter business is Wheels Up, a member-based company that has carved its niche mostly by offering private charter rentals by the hour to its well-heeled clientele. But Memorial Day saw the commencement of Wheels Up Shuttles, offering flights out of private terminals in the New York and Boston areas to Nantucket.

The least expensive membership at Wheels Up costs $5,950 annually, and a seat on the eight-seat, King Air 350i shuttles costs $858 each way. When the summer Nantucket season ends, Wheels Up plans to shift the shuttle service to link New York and Boston.

"We're after somebody who values private flying but who wants to do it in the most feasible way economically," Wheels Up founder Kenny Dichter said. When Wheels Up members rent an aircraft privately to go from New York to Nantucket, he said, it costs nearly $4,000.

Wheels Up, which carved its niche by offering private charter rentals by the hour, has added a shuttle service that offers flights out of private terminals in New York and Boston to Nantucket, Mass.
Wheels Up, which carved its niche by offering private charter rentals by the hour, has added a shuttle service that offers flights out of private terminals in New York and Boston to Nantucket, Mass.

A value equation: time = money

While price points and business models vary significantly within the emerging schedule-charter industry, all the operators emphasize the time they save flyers compared with commercial carriers.

For Jimmy Broder, a New Canaan, Conn.,-based finance executive who has a summer home in Nantucket, those extra hours are paramount. Broder said he saves two hours per trip by flying from White Plains on Tradewind compared with the time it took when he flew commercial to Nantucket out of New York LaGuardia.

"I can get to Nantucket quicker than people who are driving to the Hamptons," he said.

In addition, Broder touts the personalized service that Tradewind offers. For example, if Nantucket's frequent fog causes a flight delay, a Tradewind employee will call customers directly to let them know.

"You'd rather be at your home than at the terminal waiting hours upon hours and maybe have your flight canceled," Broder said.

A Tradewind Aviation shuttle, a Pilatus PC-12, soars over New York.
A Tradewind Aviation shuttle, a Pilatus PC-12, soars over New York.

The timing is right

Along with the obvious hassle of growing security lines, analysts cite various reasons why the timing could be right for the growth of the scheduled charters sector.

Notably, even as their seating capacity has grown, commercial airlines have been cutting back on flights in recent years. Between 2005 and 2015, the number of commercial domestic flights in the U.S. decreased from 10 million to 8 million, according to the Bureau of Transportation Statistics. With that decline has come more concentration in the route networks of major carriers as well as a contraction of hubs.

Scheduled charters can fill some of those holes, just as Ultimate Air Shuttle has done linking Cincinnati and Cleveland.

The increasing concentration in the U.S. commercial route network is also benefiting scheduled charters in a less obvious way. Regional airlines, many of which operate flights for American Eagle, Delta Connections and United Express, are shedding their 30-seat aircraft as they move toward more economic and efficient 70- to 90-seat planes, creating a glut on the market. That glut has benefited JetSuiteX, which has been able to purchase the Embraer 135 aircraft it operates at a discount, Wilcox said.

Brett Snyder, who writes the popular aviation blog Cranky Flier, said another factor that plays to the advantage of scheduled charters is the weakening of loyalty programs. For example, since 2014, American, Delta and United have all made it more difficult to obtain elite status by adding minimum annual spending thresholds on top of the previously existing minimum mileage thresholds. In addition, airlines have become more loath to offer upgrades to business class and first class.

Such policies can reduce brand loyalty among business flyers, Snyder said.

"The harder airlines make it to access benefits in their loyalty programs, the easier it is for a traveler to choose the flight that's best for them, regardless of airline," he said.

Food offered on a morning Ultimate flight.
Food offered on a morning Ultimate flight.

Confusing business models

Still, not everyone is convinced that the scheduled charter industry is poised to make a noticeable dent in the U.S. aviation market.

Joe Brancatelli, editor of JoeSentMe, a subscription-only website for business travelers, points out that for all the new players in the business of late, it's an industry that remains on the margins, largely unknown even among business travelers. And the fact that operators have different business models, with some requiring memberships and others not, further complicates matters.

"Information and explanation are the first things these guys should go about doing," Brancatelli said.

"Why aren't they cross-selling on each others' websites?"

Some charter shuttle players, notably Tradewind and Ultimate Air, distribute through GDSs. But Chris Vukelich, a 40-year travel industry veteran and former vice president at Egencia, said they all should be doing so.

"Unless you can actually book them in the channel where business travelers actually live, they're going to be nothing but an interesting anomaly outside the norm," Vukelich said of scheduled charters. He added that even companies that use GDSs face challenges due to operating out of FBO terminals.

For example, a travel agent booking a ticket out of Cincinnati knows to look for flights from Cincinnati/Northern Kentucky airport but might not find Ultimate Air flights out of Lunken Field.

"So being in the GDS is one thing. Getting people to look at it is another," Vukelich said.

The recent failure of the scheduled charter company Beacon Air has also raised eyebrows among skeptics of the business model. The company, started by three Surf Air co-founders last summer, launched with one New York-Boston route. Similar to Surf, it worked off a membership model, with a monthly fee of less than $2,000. But Beacon went out of business in March.

"They have to have more than a good idea," Harteveldt said. "They have to have the financial resources so that they can invest in the marketing activities to help create consumer awareness."

Still Tradewind's Zipkin sees plenty more opportunity for growth as flyers look to attain the convenience of private flying at an affordable cost.

"You have private charters, which are very convenient, and you have traditional airlines, which are very inconvenient, and for a long time nothing in between," Zipkin said. "So I do think that there's a great opportunity to satisfy that need with smaller, new, more creative concepts."

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