Atlantic Coast CEO: still need Regional JetsCEO has low-fare vision for Atlantic
Staff and wire reports
(December 23, 2003) — Kerry Skeen is waging a battle for the future of Atlantic Coast Airlines.
The 51-year-old chief executive is simultaneously tackling the two greatest challenges since he co-founded the regional airline 14 years ago — to reposition the company into an entirely different kind of business while at the same time fending off a hostile takeover attempt.
Skeen wants Atlantic Coast, which carried 7.2 million passengers last year as the nation’s sixth-largest regional airline, to end its affiliation with financially troubled United Airlines. He would re- create the airline as a low-fare venture to be called Independence Air. Just as Atlantic Coast is now, it would be based at Dulles International Airport outside Washington, D.C., and serve 50 U.S. cities, including Rochester.
“We definitely are committed to Rochester,” said Rick DeLisi, spokesman for Atlantic Coast which sent a consultant to check on available gate space at Greater Rochester International Airport.
The airline’s projected schedule includes seven or eight roundtrip flights between Dulles and mid-size cities such as Rochester that would begin in May, according to a letter sent to the Rochester airport and obtained by the Democrat and Chronicle.
Currently, the airline flies as a United Express carrier, including four daily nonstops between Rochester and Dulles and three nonstops between Rochester and Chicago O’Hare International Airport.
It’s likely Independence Air would service the Rochester/Dulles route using “50-seat regional jets on a very frequent schedule,” DeLisi said.
Travelers should expect to pay “very reasonable fares similar to other low-fare carriers around the country,” DeLisi added.
Freed from its contract with United Airlines, Skeen pledges fares that are 30 percent to 70 percent lower than today.
“We will bring lower fares to communities that quite frankly don’t have low fares,” he said.
The airline’s commuter aircraft could serve some of the small and midsize markets passed over by the low-fare revolution. And it would maintain its relationship as a regional partner for Delta Air Lines.
“Competition is good,” said Terry Slaybaugh, director of the Rochester airport. “It will add an additional 300 seats a day of low-fare service in the marketplace. That’s very positive.”
But taking a consistently profitable carrier into the uncharted airspace of low-fare flying is full of risks. In breaking away from United Airlines, Atlantic Coast would be leaving a benefactor that last year accounted for 82 percent of its revenue.
No longer would Atlantic Coast fly as United Express, making flights connecting with United’s big jets at the Dulles and Chicago hubs.
The low-fare airline plan is deemed so risky that it has opened the door to a takeover attempt by Phoenix-based Mesa Air Group, another regional carrier that would keep Atlantic Coast’s current commuter flying intact. CEO Jonathan Ornstein says Atlantic Coast has embarked on an untested plan and would be wiser instead to become part of his growing regional airline empire.
Skeen says Mesa and United are ganging up to pulverize Atlantic Coast’s plans. In a letter sent recently to stockholders, he points to an agreement between United and Mesa that requires United to increase the fees it pays Mesa if the commuter carrier succeeds in gaining control of Atlantic Coast’s board. Skeen has also gone to court, awaiting a ruling from U.S. District Judge Rosemary Collyer in Washington on its motion for a temporary court order that could slow Mesa’s bid.
The takeover issue has drawn attention from what Skeen views as the sheer logic of what he’s trying to accomplish. With United fighting through a bankruptcy reorganization, the glory days of serving as a regional partner have faded. Atlantic Coast broke off talks with United in July. United hopes to emerge from Chapter 11 in 2004, but Skeen asserts that 70 percent of airlines that have filed for bankruptcy reorganization eventually file again. He noted that US Airways is still losing money.
Includes reporting by Gannett News Service and staff writer Todd Grady.