July 17, 2004

Wheels Up for Area's New Airline

Kyle Stock  /  Post and Courier

Discount Carrier Independence Starts Service Today

Discounter Independence Air begins service from Charleston to Washington Dulles International Airport with connections to nearly three-dozen destinations today, a day after the carrier's stock plunged by more than 12 percent.

The new low-fare brand of Atlantic Coast Airlines Holdings Inc., which has flown U.S. skies for 14 years under contracts with United and Delta, is offering seven flights daily between Charleston and its hub outside Washington, D.C.

Seats on the carrier's fleet of 50-seat jets will range from $69 to $125 one way. Atlantic Coast is completing its obligations to fly United flights in waves this summer and adding new Independence routes in corresponding waves. Today, it also is starting service to Greenville-Spartanburg; Burlington, Vt.; Buffalo, N.Y.; Rochester, N.Y.; and Lansing, Mich.

"So far, the response in the Charleston market has been very strong," Atlantic Coast spokesman Rick DeLisi said Friday. "It's a clear sign that we're on the right track, but the first glimpse of meaningful traffic will be in September, when our whole network is up and running."

The new service is welcomed by travelers in general but represents especially good news for the area's defense contractors and meeting planners, both of whom get most of their business out of the nation's capital.

After months of anticipation, Atlantic Coast announced its flight plan May 19. Lowcountry residents and businesses were delighted to see that the Holy City was on its list. Analysts and investors, however, have questioned the venture's viability from the start. The airline's stock fell from $4.42 to $3.91 Friday, a loss of 12.1 percent from the day before and 63 percent since Atlantic Coast announced a year ago it planned to break off its relationship with United.

Analysts point out that the airline's 50-seat jets cost more to operate per seat than the bigger planes such as 737s that make up Southwest's fleet. The airline has said it needs an average load factor of around 70 percent to break even.

DeLisi declined to detail how sales are going. The airline's planes in June were 75.7 percent full, down from 77.3 percent in June 2002, but those numbers reflect a lot of routes flown for other airlines.

At midday Friday, Atlantic Coast still was selling $69 fares on three of its six flights to and from Washington today, while $120 seats were available on one other departing flight and two other routes into Charleston.

Tony Pieretti, Atlantic Coast's station manager in Charleston, said the airline is seeing better results here than in many of the other cities in its initial rollout. "All the other cities got 30 people or 50 people at the start, but my first flight tomorrow has 50 people on it and there's only 50 seats on there," Pieretti said. "We knew that was going to happen in Charleston. We knew this would be a great market."

Greenville-Spartanburg's first flight had 40 seats booked as of late yesterday afternoon, according to airport spokeswoman Rosylin Weston.

Independence Air plans to keep its planes in the air longer, about 11.5 hours a day, and turn them around at gates faster than it did while flying as Atlantic Coast for United. The high-traffic flight plan is designed to make the airline more profitable, but it also leaves its schedule more susceptible to delays. The airline already has a poor on-time record. In May, only 69.4 percent of Atlantic Coast flights arrived on time, the worst rate in the industry. Analysts say the situation may be exacerbated by crowding at Dulles and summer air traffic reaching levels not seen since 2000.

Since Atlantic Coast announced its route map, incumbent airlines have slashed prices up to 90 percent in an effort to hold on to market share and make Independence's entry into the market less than hospitable. On Wednesday, US Airways announced new $89 fares between Charleston and Washington. This tactic has managed to wash out more than one new discount airline servicing Charleston in the past.

To make money, Independence Air will have to lure passengers away from their frequent-flier programs or win a critical mass of first-time travelers. John Powers, president of Charleston-based Travel Management Group, said a number of his corporate clients have issued policies to fly only on Independence Air. Powers also said incumbent airlines have not cut prices as aggressively as he thought they would. "I think they're still waiting to see what happens," he said.

Independence started service out of Columbia on June 23. Passenger traffic has been up ever since, and airport officials are getting thank you calls from passengers excited about the new, relatively inexpensive tickets, according to Kerry Stockman, a spokeswoman for the airport. "Columbia is a market that has been thirsty for something like this," Stockman said. "I do think that it's offering people a chance to fly who may not have had the opportunity before."

Ernest Andrade, head of the city of Charleston's Digital Corridor initiative and one of the leaders of a community effort to court a discount carrier, bought one of the first Independence Air seats out of Columbia. "I was extremely pleased," Andrade said. "If these guys focus on providing that high level of service, I think they will win every time."

The airline's massive marketing campaign already has hit the Lowcountry, boosted by $55,000 in advertising money contributed by the Charleston Area Convention and Visitors Bureau and the Charleston County Aviation Authority. Local television ads for the airline started airing about two weeks ago. In September, Atlantic Coast will start taking delivery of 27 132-seat jets. It plans to spread its route map to the West and Midwest with the bigger planes.