CityTrans Airlines is looking for investors to fund the startup of a new, all jet airline serving the Grand Rapids, Michigan region. This airline will provide service to several destinations from Grand Rapids which are underserved and have no nonstop airline service.
Why Grand Rapids?
Grand Rapids, Michigan has a consolidated metropolitan area population of approximately 1,089,000. In addition, there are several nearby smaller metropolitan areas in south central Michigan within a short catchment distance of the Grand Rapids airport, which expands the natural market size beyond what the metropolitan area population would indicate. For example, the metropolitan area of Lansing is approximately 50 miles from Grand Rapids, providing the opportunity to serve value oriented Lansing passengers willing to drive the approximately 50 minutes on Interstate highway to the Grand Rapids airport.
The Grand Rapids market does not have any low cost carrier (LCC) jet airline service to any destination. The total passenger air travel market is stunted in Grand Rapids due to three factors. First, there is and has not been low fare service, so passenger growth has lagged air travel trends in general. Second, the largest intercity travel destinations from Grand Rapids are Chicago and Detroit, both of which are under 200 miles and are therefore more oriented towards driving than flying. This is particularly true in light of the percieved increase in travel time when flying due to security concerns. Third, because Chicago and Detroit have strong low cost carrier presence, some passengers opt to drive to those airports to fly to other destinations. Because the alternate airport options involve a significant drive, low fare nonstop service would be considered a very competitive option for area travelers.
Grand Rapids airport, which has three runways, is uncongested and has good ground transportation access with close proximity to Interstate 96. While Grand Rapids receives significant snowfall in the winter, the uncongested nature of the airport reduces effects of winter weather on airport operations.
CityTrans will operate four 100 to 140 seat aircraft for initial service. The aircraft type has not been set, but the Boeing 717 is the preferred type and size. These aircraft will be configured in an all-coach configuration, and will contain a minimum of 32 inch seat pitch, one inch greater than the industry norm. CityTrans will lease aircraft at competitive rates. While crew and operation of the airline will be built based on a new workforce concentrated in Grand Rapids, some maintenance and other procedures will be outsourced due to the relatively small initial size of the carrier.
From Grand Rapids, Michigan, the following six destinations are planned:
Several other destinations are considered for future expansion as more aircraft are acquired. These include:
An analysis of each initial market and the competitive situation is given here.
Baltimore/Washington service provides convenient access to both the Baltimore and Washington metropolitan areas. The combined metropolitan population is over 7,600,000. Downtown Washington, DC is approximately 30 miles from the airport. Baltimore features extensive low fare service to many destinations. There is no competing nonstop service from Grand Rapids to any of the Baltimore/Washington area airports.
Boston has a greater metropolitan area population of over 5,800,000 and is the hub of the New England region. Boston is not a major hub for any individual airline; this creates more opportunity for new entrant success as there is no dominant carrier with attendant strong loyalty. While Boston Logan airport is occasionally subject to weather and air traffic delays, the airport does not have slot restrictions. There is no competing nonstop service from Grand Rapids to Boston or any of the nearby area airports.
Fort Lauderdale is the low fare gateway to the south Florida region. The Miami-Fort Lauderdale area has a population of over 3,800,000 and is a major tourist destination. This airport provides a less congested and lower cost alternative to Miami airport. This is the longest route in the system, at about three hours per flight. There is significant seasonal traffic on this route due to the long winters in Grand Rapids. There is no competing nonstop service from Grand Rapids to Fort Lauderdale or any of the nearby area airports.
New York/Newark is the premier gateway to the largest airline market in the United States. The greater New York area has a population of over 21,100,000. While Newark airport is occasionally subject to weather and air traffic delays, the airport does not have active slot restrictions. Schedules will incorporate increased layover times at Newark and in the air to compensate for this. There is competing nonstop service from Grand Rapids to Newark with two Continental Express daily departures using regional jet equipment.
Orlando is a major tourist destination and features extensive low fare service to a variety of destinations. Air traffic to Orlando is much larger than its metropolitan population of over 1,600,000 would indicate due to substantial tourist traffic. There is significant seasonal traffic on this route due to the long winters in Grand Rapids. Orlando also provides access to Tampa, which is a 90 minute drive away. There is competing nonstop service from Grand Rapids to Orlando with one Northwest Airlines daily departure using DC-9 equipment.
Philadelphia has a greater metropolitan area population of over 6,100,000. The airport is conveniently located near the center of this area. While Philadelphia airport is occasionally subject to weather and air traffic delays, the airport does not have slot restrictions. There is competing nonstop service from Grand Rapids to Philadelphia with one USAirways Express daily departure using regional jet equipment.
An average of two one way frequencies per day are planned on each route. The most popular destinations feature three one way daily frequencies, while the Florida routes provide single daily frequencies. This scheduling will provide complete time of day coverage for business and leisure travelers on most routes. Schedules will be fine tuned and expanded after operations start and as additional aircraft are acquired.
View Preliminary Flight Schedules
Fares will be set according to market conditions, but CityTrans expects to become the market price leader in markets it serves. While fares are significantly affected by the competitive situation and other factors, expected long term fare levels are as shown below as one way fares for each market.
CityTrans ticketing policies will be competitive with the industry, and change fees will be low by current standards. All ticketing is electronic and all fares must be purchased within 24 hours of reservation or within 24 hours of departure, whichever comes first. Unrestricted fares are always refundable and changeable without penalty up to 4 hours before departure time. The Special, Discount, and Deep Discount fares can be used as a credit for future travel for a $20 fee if changes are made at least 4 hours before departure time. All funds become nonrefundable after 4 hours prior to departure time; however, standby travel is permitted on the next available flight for passengers who check in no more than 4 hours late for their scheduled flight. Standby travel on earlier departures is permitted onto flights leaving less than 4 hours before original departure time.
Four fare levels are intially planned:
|Grand Rapids - Baltimore/Washington||$190||$152||$114||$76|
|Grand Rapids - Boston||$230||$184||$138||$92|
|Grand Rapids - Fort Lauderdale||$265||$212||$159||$106|
|Grand Rapids - New York/Newark||$225||$180||$135||$90|
|Grand Rapids - Orlando||$245||$196||$147||$98|
|Grand Rapids - Philadelphia||$210||$168||$126||$84|
CityTrans Airlines will provide low fares and quality service. CityTrans staff will focus on providing superior customer service and high productivity and reliabilty. Flights are short enough that inflight service will match the standards of beverages plus peanuts, pretzels, crackers, and/or chips as is the norm in the industry today. Citytrans will not overbook flights; this is accomplished through requiring ticket purchase before departure and requiring any changes to be completed before departure time. CityTrans will not interline with other carriers to simplify operating procedures. All CityTrans bookings will be electronic and will be available through internet or a toll free reservations line. Advertising will focus on the home market of Grand Rapids, in a effort to build momentum and recognition for the new "hometown carrier". CityTrans will provide a simple but useful frequent flyer program which will provide a free roundtrip after five paid roundtrips. The award structure may change with the potential addition of longer routes in the future.
For more information, please contact Robert Stack, Investor Relations, email citytrans ~at~ rstack ~dot~ com .
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