Three aviation consulting firms have merged to form The Velocity Group, an aviation consultancy focused on future airline business models and competitive strategies. One of the firms, Washington, D.C.-based AvStat Associates, headed by Doug Abbey, is a regional aviation consultancy that has for years tracked regional airline industry statistics for the Regional Airline Association.

"With nearly half a century of collective experience in commercial aviation, Velocity will build on the core competencies of our respective firms, and going forward, bring additional synergies to all of our clients around the world," Abbey said.

The two other firms merging to form the new group are the Miller Air Group, an aviation communications consultancy, based in Orlando, Fla., and Potomac Aviation, a leading airline finance and technology consultancy based in Potomac, Md.

The Velocity Group, which will be based in Washington, D.C., was founded to help airlines adapt to rapid changes in labor, finance, technology and market dynamics.

Velocity is predicting that incumbent low-cost carriers will grow rapidly over the next decade as they expand into new national and regional routes. The firm is forecasting that low-cost airlines' U.S. market share will grow to 55 percent by 2010, and that today's carriers will have to embrace new cost and revenue models to survive.

"Sustained regional carrier growth has been a bright spot in this struggling industry," Abbey said. "Regional carriers are themselves low-cost carriers. As Atlantic Coast's [Nasdaq: ACAI] transformation to Independence [Air] suggests, secondary markets can be served profitably with a low-cost model. JetBlue's [Nasdaq: JBLU] large Embraer [NYSE: ERJ] order confirms that legacy carriers will lose their monopoly over regional air service. Velocity's experience in regional air service can help carriers understand the risks and rewards of secondary communities."

As low-cost carriers such as JetBlue, America West [NYSE: AWA], AirTran [NYSE: AAI], and Independence Air bring low-fare service into smaller communities, they will gain a significant advantage over other low-cost carriers that remain only in large, primary markets.

"Inflexible labor contracts and cost disadvantages to new entrants will frustrate many legacy carriers," said Velocity partner Michael Miller. "Bankruptcy will become the only and last resort for carriers who lag in addressing labor cost differentials. Velocity's expertise in employee communications will be critical to clients who want to work out labor agreements out of bankruptcy."

Velocity partner Josh Marks added: "Cost growth has outpaced revenue growth since the mid-1990s. Low-cost carriers have used simple, low-fare structures to capture business market share. Major airlines must adapt with significant changes in their own fares and market strategies. Velocity's experience in finance and technology helps airlines identify and meet their market objectives."

Velocity will specialize in comprehensive business planning, domestic and international market forecasting, strategic and employee communications, financial and structural analysis, regional aviation, market analysis, new entrant planning, fleet planning, statistical analysis, government relations, crisis planning, and international market planning, specifically in Latin America and Africa.

The firm's slogan will be "Knowledge at the speed of aviation."

>>Contact: Michael Miller, 703-608-2071; Doug Abbey, 202-338-1727.<<