At a time when many airlines appear to be teetering on the brink of collapse, an intrepid group of Grand Rapids investors is preparing to launch a new commercial air service.
"We may get our heads handed to us," acknowledged Mike Gorham, an investor who also serves as vice president and operations director for SelectJet, a charter service with headquarters in Grand Rapids. But he's willing to bet there's room in the market for scheduled jet service serving such neglected markets.
"We feel confident there will be a demand for a different type of service," Gorham said.
Grand Rapids has been without commercial air service since February 2004, when Mesaba Airlines discontinued flights to the city that was its birthplace. Mesaba now operates under the Northwest Airlink flag as an affiliate of Northwest Airlines.
"The community rallied," said Mark Hoyne, manager of the Grand Rapids-Itasca County Airport. He said an action team initially formed to convince Northwest to reconsider its withdrawal from Grand Rapids. But it also proved instrumental in making the case for a new carrier.
Hoyne said the group's market research showed that many area residents and busi- nesses indicated they would fly out of Grand Rapids if convenient, reliable and affordable service were offered.
Mesaba's infrequent flights typically stopped in St. Cloud to pick up additional passengers before continuing on to the Twin Cities.
"They were set up for failure from the start," Hoyne said.
Gorham and his partners, whom he declined to name, hope to launch a new air service by March or April 2006.
Chris Van Den Heuvel was hired by Gorham and his colleagues in May to serve as general manager for Grand Rapids Air Service, the initiative's working name. The group hopes to establish a fleet that would be composed of three 30-seat Dornier 328 jets or a comparable aircraft.
The jets sell for about$12 million apiece new, but Gorham said many late-model Dorniers are on the market "for fire-sale prices."
Initially, Van Den Heuvel said, the carrier probably will offer three flights daily from Grand Rapids to Midway International Airport in Chicago, as well as four flights daily from St. Cloud to the same destination. Most of the flights would be direct, but he said that one of the flights would probably commence in Grand Rapids and stop in St. Cloud before proceeding to Chicago.
Gorham hopes the service attracts customers from throughout the region, including travelers from the Twin Ports market. Northwest Airlines offers service to Detroit and the Twin Cities out of Duluth but does not fly directly to Chicago.
"We won't be a low-cost carrier like Jet Blue," said Van Den Heuvel. "But we won't be exorbitantly priced either. Our round-trip fares will probably be in the $300 to $400 range."
For now, Gorham's attentions are focused on Grand Rapids and St. Cloud, but he sees opportunities for an upstart airline to serve other underserved communities, as well. He mentioned Fort Wayne, Ind., and Terre Haute, Ind., as other potential markets.
Gorham said he and his partners will be seeking additional investors as they prepare to launch their business.
The airline will need to successfully undergo a fitness review by the Federal Aviation Administration before it can begin operations. Van Den Heuvel said the review typically takes six months.
Part of that review involves showing the airline has adequate financial resources. Gorham said airlines are typically expected to have sufficient cash reserves available to cover a full quarter's worth of operational costs, assuming no revenues. For an airline of the size he envisions, that would require ready reserves of about $3.75 million.
Copyright 2005 Associated Press
