Since OneJet first came onto the air service scene a few years ago, the company has looked for new markets and opportunities to build service. During the 2016 International Aviation Forecast Summit held Sept. 19-20 at the Squaw Valley Resort in Olympic Valley Calif., OneJet CEO Matt Maguire sat down with Airport Business to talk about the airline’s future and where it expects to see more growth.
Airport Business: What kind of growth are you expecting in 2017?
Matt Maguire: We plan to add somewhere in the range of eight to 10 aircraft during 2017. Stepping back, we spent most of 2015 piloting the product. Our service is we provide nonstop service in markets where no one else does. The biggest question we had going in is we had seen the passenger data, we knew the fares of our competitors, but the question was, was this a product that will work? Can you really get people, six to seven people to get on a light jet-sized aircraft fly the 45 minutes and enjoy it, and could you get mainstream corporate traveler programs to buy into that?
The answer to that question was yes. 2016 has been about ‘OK, the product works, now how do we make money doing it?’ In May we moved to an operating partner with commuter authorization. Back in 2015, we had a restriction from DOT on the number of round trips we could fly and in the market we were restricted to four round trips per week. From a schedule optimization perspective and an aircraft utilization perspective it was very tough. So, this year has been about increasing the scale of the operation, the utilization of aircraft, so today we fly from Pittsburgh to Indianapolis, Milwaukee, Hartford, Louisville, Kentucky, Cincinnati is starting in October and we’ll have a sixth destination from Pittsburgh at the start of this year as well. We’re also starting service from Louisville to Raleigh-Durham, to Kansas City. 2016 has been about getting good products and now how do we optimize this and make money?
Starting last month, our Pittsburgh base went profitable, so all our routes out there are profitable now. When you have lived for several years in the startup airline world, incessantly raising capital, trying to get customers to try the product, etc., we’re now in a very, very happy place. If you had asked me last year where I thought we’d be by this time this year I’d say “well, we’ll probably have 15 aircraft and be in 12 cities. I think our view is now that we have something that’s working. We’re partnering with cities and communities to develop service. For example, when we went into Pittsburgh, that was a $3 million deal that we did with the state of Pennsylvania and Pittsburgh. We’re doing more of those deals, so I think you’ll see us grow, but really, if you look at our current footprint, it will either be to destinations that make sense — kind of interconnected to that network — or to other low hanging fruit as I’ll call them, former medium hub-sized cities. Because when you think about a business model, it’s looking for markets that are generally 300 to 800 miles of stage length, 15-80 passengers per day traveling each direction and so, former hubs, usually fit that bill pretty well.
AB: Are there any plans at all -- though it sounds like no -- that you’d be looking at other smaller markets lacking air service that happen to have a bigger business community?
MM: Well, we’re pretty much focused totally on business travel. So, Pittsburgh to Indianapolis isn’t so much of a leisure market. It’s primarily a business market. We fly Monday through Friday and so really the bottom of the range that we’ve looked at is 15 passengers per day each way in terms of size. But we found the markets were going into because their business market customers aren’t terribly price sensitive, they really are sensitive to how competitive our schedule is versus connecting carriers, so as aircraft up gauge with the mainline carriers, with bigger planes, fewer flights, so fewer options into and around the hubs, we’ve seen that help our business. For example, Pittsburgh to Hartford, we get you there in an hour, you leave by 6:15 a.m., you’re there by 7:15 a.m. The alternative is a 5:30 a.m. flight down to Newark, you sit for 2 ½ hours and then you fly up to Hartford.
So, we’re going after right now the lowest hanging fruit the largest markets that were abandoned by the mainline carriers. It’s not rocket science, it’s just good timing.
AB: Now the Louisville route you launched, it sounds like it was a bit of a surprise how well it has performed. What’s driving that?
MM: Well, it’s interesting. Louisville it’s at the end of that range. It’s about a 17 PDU market before nonstop service came in. A few interesting things happened. One, that people have a brand new marketplace, new aircraft type, it is stimulating travel, so people that would otherwise not travel because it would take them six hours to get there now can get it done in 45 minutes choose to take the trip. I think it’s a strong market both in fundamentals and the connections are pretty awful when you get there, but it’s also one of the largest markets for one of our corporate clients—Pittsburgh PNC Bank. Pittsburgh-Louisville is one of their largest domestic markets. So, I think it’s that and it’s also having been in Pittsburgh for 12 months entering this partnership with the community done a lot of marketing and advertising there, we’re starting to have some real brand recognition there in the community. The fundamentals, we only have seven seats, so if you have some awareness already in the community, I think that goes a long way.
AB: The one area you had to cut flights was out of Memphis and Indianapolis. What were the challenges there that caused those cuts to happen?
MM: We knew that we would have to transition operating carriers to get to a carrier with this commuter certification to increase our schedule and utilization to a point that it would be profitable. That was going to take a lot of capital to get there. So, the question was, at an early stage, startup airline, where do you go to raise capital? Pittsburgh was just very, very aggressive. Now that you’re going to this next stage of your business, this is where we want you to base. They gave us very, very good financial terms and in exchange, we made a commitment to them to immediately increase the number of points served from Pittsburgh. So, with winding down Indianapolis at the time, winding down the Indy to Memphis route wasn’t so much a reflection on Indianapolis and its performance. It’s a reflection that there are only so many airplanes and we needed to make a commitment to Pittsburgh in order to get that deal done.
AB: So it’s one of those that could potentially be there again in the future you just need the planes to do it?
MM: I think Indy is a great market. The Indy airport I think is one of the best managed airports in the country. We still provide twice daily round trip service in to Pittsburgh, so the local demand we’re seeing in Indianapolis is still strong. And if you look at other points you can go to, using Milwaukee as an example, the only two markets between those and Indy are pretty strong as well.
AB: When you choose Pittsburgh to be the main hub base for OneJet, how does that change the model as far as how you will operate over the entire system?
MM: I think our view is we really built a model around a collection of base cities. Now a base city is that our aircraft go out from that base and come back. Go out, and come back. Go out and come back. We’re not doing any complex routing where one route goes from Pittsburgh over to Louisville, and then continue to Little Rock, for example. So, operationally, especially early on, that has been very helpful because you have the aircraft coming back to the same point multiple times per day, we have dedicated maintenance staff in Pittsburgh, we have crew based there, so operationally it has made it very, very simple. From a utilization perspective in our model, we don’t need anything fancy at this point in terms of routing optimization, scheduling optimization, so you’ll probably see us stick with that base concept. When we open up a base in Louisville, there will be dedicated mechanics, dedicated crews there, dedicated aircraft just serving markets from Louisville.
AB: Now you truly straddle that line of not quite a charter, not quite an airline. Where are you seeing most customers coming from?
MM: Certainly commercial. These are scheduled travelers and that’s the market we wanted to go after because that’s always the highest volume market there is. You saw us make some very purposeful decisions early on to address that market. One was going through the main terminals. Given our aircraft size, we don’t have to from the main terminals. We could go from private terminals. We made a choice and invested the money and time to be able to go from sterile to sterile, to get the TSA Pre(Check) program because we said if you created a product for scheduled travelers, you need to make it feel very familiar to them and also make it feel credible.
For me…the biggest marketing challenge in my mind is how do you convince people to trust an airline brand that they’ve never heard of, fly in an airplane type, size they’ve probably never even been on before, so all these cues of familiarity and the fact they can find it in their corporate booking tool and partners with American Express and others, they go to the same airport terminal that they’ve been going to their entire lives, they go through TSA Pre, we have boarding passes, they go by an attendant, the machine goes bing, they walk down the jet bridge. Then what’s really neat is when people actually get on these aircraft, I mean they’re all leather interior, seven captain’s chairs, free high speed Wi-Fi internet, Evian bottle of water, Wall Street Journal and they’re on this cool, neat little jet, getting them someplace nonstop and it was easy to access, easy to get to and it’s permitted by their corporate travel programs. When people get on there, they’re taking photos. It’s a really neat experience.
AB: So when you’re getting into these markets, are you working with the local airport or the local chamber or other business organizations to get them on board?
MM: Well, the communities that we have the most interest in are those where there’s no dividing line between the airport director and the mayor or the governor. Smart politicians know that transportation, the utility of transportation is absolutely vital to their cities. In the case of Pittsburgh, you had both the governor and the county executive having regular meetings and actually pointing out the road the airport directors to recruit airlines to come in. In our case, those people who work together, in a matter of two days, they come back with a collective deal to us. It’s that sort of proactive mindset. Every community says that air service is a priority. OK, do you have the resources and the commitment to really make the investment to get the service that you want?
