There are only so many times you can peruse the gift shop at George Bush Intercontinental or Newark Liberty International. For business travelers often stuck at connection hubs, Houston-based ExpressJet Holdings Inc. (NYSE: XJT) has introduced a solution.
On Feb. 5, ExpressJet Airlines started ticket sales from Tulsa International Airport for non-stop service to Albuquerque, Austin, Sacramento, San Diego, Los Angeles/Ontario and San Antonio.
Change in the Wind
Until around year-end 2005, ExpressJet Airlines was the exclusive operator of Continental Express for Continental Airlines, where ExpressJet operated a fleet of 274 aircraft for Continental.
“Due to some industry changes, they released 69 of those aircraft from that agreement,” said Kristy Nicholas, ExpressJet spokesperson. “That brought the total we operate, today as Continental Express, to 205.”
“But, we obviously had aircraft we had to find homes for,” she said.
One option was branded flying, or flying as ExpressJet Airlines, which entailed “selling our own tickets, having our own customers, having our own brand and all the systems in place to support that,” she said.
Carving a Niche in Tulsa
ExpressJet Holdings announced earlier this year the 24-city direct connection system that will operate as ExpressJet Airlines. Both Tulsa and Oklahoma City are included in the service.
“The Tulsa community has consistently requested the addition of non-stop flights to the west coast,” said Jeff Mulder, director of airports with Tulsa Airport Authority. “Introducing ExpressJet has improved TUL’s ability to meet the needs of this growing market.”
“We’re definitely trying to capture people that need to go west from Tulsa,” Nicholas said. “We really want any type of customer that wants the ease and convenience of non-stop service – who doesn’t want to have to connect over a hub.”
Making life easier for business and leisure travelers to come directly to Tulsa helps to drive a local economy, ExpressJet officials said.
“We intend to deliver our customers more convenience and more service in growing cities like Tulsa with populations that are the right size for our 50-seat aircraft,” said Jim Ream, ExpressJet President and CEO, in a prepared statement.
The connection between Tulsa International Airport and the ExpressJet headquarters in Houston is an asset to the business interests of both cities, Nicholas said.
“We have a connection with Oklahoma from an oil and gas perspective. There are lots of companies that do scheduled shuttle service that’s run by the company. That’s a place where we say, ‘Your expertise is in oil and gas, and our expertise is aviation. So, why don’t you outsource your aviation department to us, and you concentrate on the oil and gas part of your business.’”
ExpressJet Airlines released a statement Feb. 5 that it planned to hire about two dozen employees in the Tulsa area and invest almost $600,000 in airport facilities and equipment. Company officials confirmed its plans in a recent interview.
ExpressJet Airlines has not yet released load numbers for Tulsa. While the company announced service cities in February, flying didn’t begin until April. Because Tulsa was in the group of cities rolled out during the third week of service starting April 16, routes were not rolled out until June 12.
“We wanted to give all the markets one month of service before releasing that information,” Nicholas said.
Look for a report on July figures from ExpressJet in August, though Tulsa numbers will not be listed separately.
Shrinking Tier III America
ExpressJet examined the economic profiles, growth patterns and connection options of several small-to-midsized cities that “did not have good non-stop options.”
“We found cities that needed some type of service to other small-to-mid-sized cities,” Nicholas said. “We thought, ‘Well, we have the right-sized aircraft to where we can connect these cities, whereas a major airline with 100+ seat aircraft, it doesn’t make sense for them.’”
While most airlines are concerned with growing global operations, ExpressJet officials said they have found their niche in Tier III America.
“We don’t have any competitors who are connecting the small-to-mid-sized cities,” she said. “You see American Eagle that competes with us in some markets, and Horizon, a west coast carrier, operates a mixture of prop planes and jet airplanes. We operate an exclusively jet fleet.”
Contains No Peanuts
ExpressJet Airlines operates 274 Embraer planes, broken down into 140 Embraer ERJ-145 and 104 ERJ-145XR regional jets, both of which seat 50, and 30 Embraer ERJ-135 planes that seat 37. ExpressJet operates 205 of the planes that serve 152 destinations as Continental Express, 18 as Delta Connection for Delta Airlines, 42 as ExpressJet Airlines branded commercial flights, and nine as ExpressJet Airlines’ Corporate Aviation division’s corporate charters. The average age of the ExpressJet fleet is 5 years.
ExpressJet aircraft are configured for none of the dreaded middle seats. All seats are aisle, window or both.
“If you’re going to be in our care for several hours, the least we can do is give you some pretty hardy snacks beyond the pretzels and peanuts, or serve you a meal,” Nicholas said.
ExpressJet added over 100 channels of complimentary XM Satellite radio at every seat, as well as memory foam cushions in the leather seats. To take the edge off traveling, staff strives to provide a top-of-the-line beverage service.
“We have beer for $1 and an exclusive wine that is made just for our airline,” she said. “It’s a really nice wine, which we sell in white and red for $3.”
ExpressJet also offers valet carry-on baggage service.
“We try to put some thought into the type of service we’re providing.”
Corporate aviation is a growing market in Tulsa, and ExpressJet is poised to compete, Nicholas said. ExpressJet launched its corporate aviation service in Dec. 2006. It’s popular with customers from business executives to collegiate sports teams.
“The benefit that our corporate aviation service can provide is commercial reliability and operational standards on departure times and schedules that Tulsa executives determine,” Nicholas said.
Operations of ExpressJet Airlines, a subsidiary of ExpressJet Holdings Inc. and one of Fortune’s Most Admired Airlines in 2005 and 2006, include capacity purchase agreements for mainline carriers serving more than 150 destinations in North and Central America with more than 1,300 departures per day; corporate aviation providing clients customized 50-seat travel options; and branded flying, providing non-stop service to 24 markets concentrated in the West, Midwest and Southeast regions of the U.S.
ExpressJet operates maintenance facilities in Shreveport, Knoxville, Ontario, Houston and Austin. Though ExpressJet does not currently have a facility in Tulsa, crews can perform maintenance on the ramp. Most ExpressJet training is done in its training facility in Houston, where all employees train together to better understand others’ roles within the organization.
ExpressJet Holdings Inc. employs 7,300 companywide. ExpressJet earnings last year were nearly $1.7 billion, or $31.28 per share, with gross profits topping $276 million. ?