How do small communities get air service in the future?

William Swelbar has a white paper posted on his blog about small community air service and the merger of American Airlines and US Airways that has inspired me to some thoughts.   The essential point (of interest to me) among his many well thought out points is this:  It isn’t the LCC carriers that provide this service.  It’s the network carriers that do so and we have lately denied that air service through slot divestitures to LCC carriers.

On the one hand, he’s entirely right.  On the other hand, I question who “deserves” air carrier service in today’s world.  My own view of the history behind this is that there are cities where such service is, in my opinion, not justified today.

Let’s not forget that small communities were originally served with some regularity in the past due to a few primary circumstances which are very different today.

First, fuel costs are monumentally more than they were even 20 years ago.  Low fuel costs allowed for a competitive fare to these communities via available aircraft that just doesn’t exist today.  Airlines are constrained by the fact that sub-50 seat jets are un-economical to use in just about any circumstance today and there are no desirable replacement aircraft in that category on the way.

Second, those many of those communities needed that air service because overland transport to major cities was very poor and even non-existent at that time.  Today, we have not only a full major interstate highway system but every state in the continental US has an excellent secondary highway system.  It’s difficult to find a place in the continental US today that is truly remote.  In most cases, people are no more than 1 to 2 hours away from air service at the worst.

Third, we don’t encourage this service the right way.  We do subsidize it under certain circumstances and do so for routes that, in my opinion, defy imagination as to why their subsidized.  At least quite frequently.  What we don’t do is subsidize industry to come up with a cost effective, profit earning solution to providing the service.  Even airlines receiving subsidies today look at those routes and realize that even if they are earning a modest profit, greater profits can be earned elsewhere and they go to earn those.

I think we need a program that encourages an airplane manufacturer to come up with what I would call the Essential Air Service Airplane.  This is an aircraft that require no greater than 500nm range fully loaded and no more than 30 seats and should travel at speeds comparable to ATR and Q400 aircraft.  They should be ruggedly reliable for dispatch so that they do not strand themselves at outstations and they should be capable of rough weather service.

Survey the network airlines and ask them what such an aircraft looks like to them in definition.  Create a government RFP for such an aircraft and contract the network carriers into committing to a minimum number of purchases and let the markets go to work.  Frankly, I would like to see Bombardier and/or Embraer work this problem themselves because I think such an airliner has potential in places such as Africa, India and parts of Asia and Australia.  Small and efficient can be very profitable if it is reliable.  Look at Azul in Brazil and you’ll see just how that works out.

In these conversations, I pick on cities here in Texas like Waco quite often.  Waco does not justify high frequency flights to DFW airport (and Houston Intercontinental) with 50 seat jets.  It’s far too close to Dallas for that.  But if you had a small essential service airliner defined above, that airliner could actually serve the frequencies that exist today as fast or, possibly, faster than the 50 seat jet and potentially with greater reliability.

Don’t build this aircraft with too much range.  Keep it simple and constrained to true regional routes.  It can’t be a mistress to the short haul, small community markets and also mistress to the long and thin markets.

Make it large enough to inspire confidence and I think we know enough about building such aircraft today that we can make it possible to walk an aisle in this aircraft without feeling like you’re crawling into a cave.  Make sure it can serve these routes from hot and high locations such as Denver, Salt Lake City and Phoenix.  That means some slats and flaps most likely but do not make this aircraft a STOL aircraft.  The airports it would serve today are all adequate for a small aircraft configured to meet these needs with efficient wings.  STOL aircraft sound great until you realize they are rarely needed but they always have the penalty of being built with draft that can’t be avoided.

If I’m Embraer or Bombardier, I would look to build this aircraft in Wichita, Kansas.  There is enough expertise there, enough facilities and I’ll bet that Kansas would be looking to make a heck of a deal on taxes these days.  Use modern avionics but design it to be simple and easy to qualify on.  Make it the airliner that future jet pilots start on.  Make it forgiving which will help some in making it rugged and reliable.  Use as many Commercial Off The Shelf components as possible and go to Garmin to build your flight deck instead of going with a pricey system from someone else.

Make it so that a network airline and/or regional airline can purchase this aircraft and operate it profitably with oil at $130 / barrel right from the start.  Offer loans at low interest rates to ensure capital costs are low enough to be attractive to these same airlines.  Get airports to offer low cost fees for using such airliners to their airports.  Convince those same airports that these airliners are their future and not their shame.  Keep the jet ego out of this conversation.

This airliner can be built and it can be profitable for the manufacturer and the operator.  It needs a sponsor and while I readily admit that it might not offer as much net profit as a 737 sold at list, just how many of those 737s do we think are selling for list prices anyway?  It is entirely possible that Boeing and Airbus are now making profit on lease deals rather than on the sale of an aircraft.

This aircraft needs someone of vision and leadership to see it done.  That person needs to be able to go to 8 to 10 airline heads in the US and convince them that not only can it be done in a timely manner, it can be done cost effectively as well.  Those guys still exist but they are a bit harder to find.   And it doesn’t have to be Bombardier or Embraer either.  This could be Cessna or maybe even the new Beechcraft.  Maybe it needs to be a partnership between the two companies.  Partnerships have been very good in some instances.  I point to the GE/SNECMA relationship as just one example.

Airlines are dysfunctional organizations.  You won’t get them to provide that air service by offering them the chance to break even or make a modest profit.  They won’t necessarily band together and ask for a new airliner either.  But if you deliver that baby on their doorstep, they just might adopt it and call it their own.

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