There may be a 'micro airline' on your itinerary in the near future

Posted Aug 5th 2008 4:30PM by Joseph Lazzaro
Filed under: Forecasts, Other Issues, Consumer Experience, Competitive Strategy

What's one over-the-horizon trend that passengers (and investors) would be wise to monitor closely? Micro airlines.

Micro airlines will be small carriers that target the leisure travel market, stock analyst and frequent flier C. Leonard Bauer told BloggingStocks Tuesday.

Bauer is quick to point out that these carriers don't exist today -- the commercial aviation sector's financials can't currently support them -- but when design advances (including composites), increased engine efficiency, and a drop in oil and aviation fuel prices turn in the airline sector's favor, look for micro carriers to sprout, he predicted.

A streamlined air itinerary

Further, Bauer doesn't count current 'regional airlines' or 'express airlines' such as United Express as micro airlines because micro airlines will differ from the former in one significant way: "They'll have vastly reduced check-in times compared to regional airlines," Bauer said. "For a portion of the leisure travel public, this will be the deal-clincher." Bauer added that he doesn't own shares in nor have a rating on any airline.

As evidence, Bauer offered Dallas-Forth Worth International Airport. (Bauer added that he "doesn't mean to pick on DFW" -- he could have easily picked New York's LaGuardia Airport or Hartsfield-Atlanta -- but Dallas provides a good example.) A connection at DFW is a fairly basic travel task, unless you have to change terminals. DFW has five: A, B,C, D, and E.

If your flight from, say, New Orleans to Phoenix requires you to change planes AND change terminals at DFW, you have to -- you guessed it -- re-check in at the new terminal, including a full security screening required for all commercial flights by the U.S. Transportation Security Administration. "Your already-screened and checked-in bags move right along, but in many cases you and your carry-on bag don't, if you happen to arrive just when other flights feeding passengers into that terminal arrive," Bauer said. "Two check-ins, and sometimes a missed connection, for one trip from New Orleans to Phoenix. Not ideal."

Micro airlines, with jets that typically seat 30-70 passengers, will offer substantially reduced check-in times and in the process build a market, Bauer argued. What will be the key factor in their formation? Technology, he said. Lighter materials and new, more-efficient engines -- with some technology borrowed from systems currently found on corporate jets -- will make it cost effective for these micro airlines to operate. With a moderation in jet fuel prices, Bauer sees micro airlines forming "in 2-4 years."

Airline Sector & Travel Analysis: Bauer's projection for the next major change in air travel may be somewhat ambitious, particularly if oil stays above $100 per barrel, but his look down the runway is appreciated (pun intended). Any safe, cost-effective change that reduces total travel times would represent an advance in air travel, and a long overdue one at that.

Tags: airline sector, business travel, commercial aviation, Dallas Forth Worth International Airport, express airlines, Hartsfield Atlanta International Airport, LaGuardia International Airport, leisure travel, oil prices, regional airlines, travel, UAL, UAL Corp.

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Reader Comments (Page 1 of 1)

8-05-2008 @ 5:53PM

John said...

Mr Bauer is mistaken, at least about DFW. They have a transportation system inside security which will whisk you very quickly to any terminal in the airport. It takes 15 minutes to travel all the way around the airport, and since it is inside security you do not have to be rescreened by the TSA to change terminals. I fly through DFW often and this system is awesome.

However, once I had to change terminals at LAX and had to walk outside and down the street. There I had to be re screened and also the same story at JFK. Pain in the rear!