Copyright 2000 St. Louis Post-Dispatch, Inc.
St.
Louis Post-Dispatch
November 26, 2000, Sunday, FIVE STAR LIFT
EDITION
SECTION: BUSINESS, Pg. H1
LENGTH: 1168 words
HEADLINE:
TRANS STATES AIRLINES IS ON THRESHOLD OF EXPANSION AMID INDUSTRY CHANGES;
NEW ALLIANCES WITH MAJOR AIRLINES WILL BE CRUCIAL
BYLINE: Cynthia Wilson; Of The Post-Dispatch
BODY:
A new round of airline consolidation
expected to occur if the merger between United Airlines
and US Airways is approved will have a major impact on regional air
carriers like Trans States Airlines. How the privately held regional airline
based at Lambert Field positions itself in the coming months will significantly
affect its future in the airline business, experts say.
TSA is in the
midst of adjusting to several market changes, including adjustments to Trans
World Airlines' route system. TSA announced last week that it will resume a
code-share agreement with US Airways that will allow TSA to maintain and expand
its presence in the Northeast. The exact routes TSA will fly under the US
Airways Express brand has not been determined, said William Mishk, TSA's vice
president of marketing. Some industry experts say the agreement with US Airways
is an important one for TSA. Without the agreement or any other, come Jan. 5 TSA
would have had just one code-share partner -- TWA, an airline forecast to post
its 12th consecutive annual loss this year. Additionally, several of TSA's
aircraft could have been left idle.
"(The agreement) shows TSA is still
being considered a player in the commuter market," said Dave Richardson, air
carrier research director for AvDataInc., an industry research and publishing
firm based in Wichita, Kan.
Still, given the proposed industry
consolidation and financial difficulties TWA continues to face, TSA can't afford
to become complacent, Richardson said. The airline must continue to aggressively
seek additional alliances, he said.
However, Michael Boyd, president of
the Boyd Group, an aviation consulting firm in Evergreen, Colo., believes it
will be difficult for TSA to secure a marketing agreement with a major airline
other than TWA.
"All other airlines have the partners they want," Boyd
said. "They don't need TSA."
Boyd said TSA must continue to address the
customer service and reliability issues that cost its sister company a contract
with United Airlines at Chicago's O'Hare Airport earlier this year. Similar
reliability issues also led TWA last year to structure a deal that rewards TSA
for outstanding performance and punishes it for substandard results, he said.
Mishk acknowledged the on-time challenges TSA faces in the Northeast,
given the ongoing air traffic control problems there. He said TSA is trying to
build in some safeguards. But he disagreed that major airlines don't have a need
for TSA's services.
TSA's independence gives it the flexibility to
respond to the needs of major airlines that many regional airlines --
particularly subsidiaries of major airlines a flexibility that many regional
airlines, particularly subsidiaries of major airlines, don't have, Mishk said.
He added that TSA has simplified its fleet from four aircraft types to three to
reduce the amount of parts TSA needs to maintain its fleet and allow more
opportunities to share maintenance costs with other airlines. TSA has also
committed assets to boost the number of regional jets in its fleet, Mishk said.
Major airlines "are still interested in who can provide the best service
at the lowest cost," Mishk said. "We want to make sure we have ourselves in a
position to have a route network and infrastructure that supports any
opportunities that come our way.
"The moves we have made in the last 60
days help insulate and ensure the future success of the company," Mishk said.
TSA executives believe that more regional jets will play a key role in
TSA's ability to take advantage of those opportunities, Mishk said.
Experts say regional jets are preferred by travelers connecting to the
hubs of major airlines because the jets offer a smoother, quieter and faster
trip. Additionally, regional jets require fewer passengers to be profitable than
larger planes and have an average travel range of about 1,000 miles, making them
ideal for serving markets that are uneconomical for larger jets.
Those
attributes put regional jets in great demand among airlines, which use them to
feed their big jets, attract more customers and improve their bottom line.
Little wonder. Operating margins for regional jet serv ices are roughly 13
percent industrywide, said Timothy Moloney, transportation and utilities analyst
for Banc of America Capital Management in St. Louis. This compares to operating
margins of 8 percent to 10 percent for mainline services, he said.
Consequently, most of the airline industry's seat-capacity growth - an
estimated 20 percent to 25 percent annually over the next three to five years -
will come from the addition of new regional jets, Moloney said.
This
reality prompted TSA to get out of the 19-seat turboprop aircraft business,
where it was losing money, and add more regional jets, Mishk said. TSA returned
the last of its 35 British Aerospace Jetstream-32 airplanes to a leasing company
in May, he said
TSA now has nine Embraer-145 regional jets in its fleet
of 42 aircraft, including three in service for TWA. TSA will add six long-range
versions of the jets to its fleet by the end of 2001, Mishk said.
TSA's
ability to add more regional jets will depend, in part, on how quickly
manufacturers can produce the aircraft. Currently, Brazil's Embraer and Canada's
Bombardier and Canadair are the primary makers of regional jets. The backlog on
new orders has extended into 2002.
In the meantime, TSA is responding to
changes TWA is making to its ro ute system, particularly at New York's John F.
Kennedy Airport, where TSA will terminate service Jan. 5. When TSA ends service
there, it will no longer provide feeder service for Delta Air Lines and United
Airlines.
TSA's decision to leave the hub was prompted by TWA's decision
to cut back on the European flights its jets flew out of JFK because those TWA
flights were unprofitable. While some analysts view TWA's new strategy as a good
move for the airline and its long-term profit outlook, it has affected TSA's
bottom line.
The route changes at Kennedy left TSA with a declining base
of international passengers there and affected - in part - the number of cities
it serves. A year ago, TSA flew to more than 39 cities. It now flies to 32
cities, including 29 TWA destinations. On Jan. 5, the number of cities TSA
serves would have fallen to 20 without TSA's reactivated code-share partnership
with US Airways. The revitalized agreement with US Airways will boost the number
of cities TSA serves to 37 after Jan. 5.
Mishk said TSA will serve much
of the Northeast market with six Embraer 145 regional jets already in service
there. He added that most of the new jets slated for delivery next year will fly
Northeast routes. The balance of the new jets, however, have not been committed,
he said.
TSA, however, is confident it will find a home for the jets or
any aircraft in its fleet that may become available.
"There's a tier of
cities that need feeder service that can't justify regional jet service," Mishk
said.
GRAPHIC: GRAPHIC, MAP, PHOTO (1) Post-Dispatch
Graphic / Chart / Map - Trans States Airlines at a glance
Cities served: 32
Daily flights: 300 systemwide - 180 in St. Louis
Average daily
passengers: about 5,000 systemwide - 3,000 in St. Louis
Employees: about
1,110
(Map of midwest and northeastern United States showing:)
- Trans
World Express routes
- Trans World Conenction routes
- Delta Connection
routes
Illinois - Moline, Peoria, Bloomington, Springfield, Champaign,
Decatur
Missouri - St. Louis Columbia, Springfield, Joplin
Souce: Trans
States Airlines
(2) Color Photo by Molly Corso/Post-Dispatch - Nathan Steel
of Woodson Terrace loads baggage into a commuter flight to Peoria Friday
afternoon at Lambert Field. The jet, which seats 50 passengers, is one of the
new planes in Trans States Airlines fleet. The airline flies commuter flights
for TWA out of St. Louis from towns as close as Columbia, Mo., to as far away as
New York.
LOAD-DATE: November 26, 2000
