Feb. 23, 2012 at 8:47 AM ET
American Airlines is in bankruptcy, other carriers are facing rising oil prices and millions of people rate the experience of flying right up there with root canals and IRS audits.
Sounds like the perfect time to get into the airline business, doesn’t it?
Actually, and head-scratching logic to the contrary, that’s exactly what a few entrepreneurs are proposing to do. From Newport News, Va., to Carlsbad, Calif., the allure of aviation is once again proving irresistible.
“The market periodically sees new entrants who truly believe they have a better mousetrap,” said consultant Robert Mann of R.W. Mann & Co. “But the ability to differentiate yourself against the incumbent airlines is very difficult.”
Which, of course, doesn’t stop people from trying, especially as major carriers have pulled out of smaller markets. The resulting loss of service, goes the logic, is a niche that can be filled by a smaller carrier with lower costs and a limited scope.
The newest potential entrant is PEOPLExpress, which rolled out a plan last week to offer service from Newport News/Williamsburg International Airport in Virginia to smaller East Coast airports that could include Pittsburgh, Providence and West Palm Beach.
The plan, which still requires financing and FAA approval, is to offer low-cost fares while providing free checked bags, seat assignments and other perks that have been eliminated by many carriers.
For fans of aviation history, that’s somewhat ironic, as the carrier is the successor to the original PEOPLExpress, which flew from 1981 to 1987 and which many credit as being the industry’s original bare-bones, no-frills carrier.
As such, the idea of building on the reputation of a failed carrier has raised eyebrows among some observers. “We’ve had two shots at Pan Am, two shots at Braniff and a couple of people monkeying around with Eastern,” said consultant Mike Boyd of Boyd Group International Inc.
“The name has given them a lot of rah-rah but what was PEOPLExpress 25 years ago was a failure,” he told msnbc.com.
Meanwhile, in another, albeit less direct, nod to the past, plans are progressing at California Pacific Airlines, which hopes to recapture some of the buzz and consumer loyalty of Pacific Southwest Airlines, or PSA, which serviced California from 1949 to 1988.
Based at McClellan-Palomar Airport, in Carlsbad, Calif., the airline’s main differentiator will be its ability to provide a low-cost, crowd-free alternative to San Diego International Airport. Proposed routes include Las Vegas, Phoenix and three cities in Northern California.
Earlier this month, the airline passed Phase I of the FAA’s certification process. It has also leased two Embraer 170s and expects to start training flights crews in late spring or early summer.
“If everything goes as scheduled from here on out, we’re hoping to be ‘wheels up’ by late summer or early fall,” said spokesman Tom Morrow.
At which point, the real challenge will likely begin, say industry veterans, who note that as soon as a new carrier takes off with low fares, incumbent airlines roll out their own fare sales to entice people to stick with the status quo.
“On certain routes, there’s potential for a new carrier to make inroads,” said Kent Craford, president of Alaska Seaplane Service LLC and the former CEO of Portland, Ore., startup SeaPort Airlines Inc. “But what we’ve seen happen is that the majors just lower their fares to beat them so that any comparative advantage based on price goes away the first day you begin operating.”
“Startups as a group tend to overestimate their niche and underestimate the competitive response,” added Mann. “That combination can be crushing.”
Even so, he understands the desire to try. “If someone really does have a better mousetrap, bring it on,” he told msnbc.com. “But as a practical matter, it won’t be easy.”
Rob Lovitt is a longtime travel writer who still believes the journey is as important as the destination. Follow him at Twitter.