JetAmerica Suspends Operations

JetAmerica, the fledgling low-fare U.S. air carrier patterned after discounter Ryanair, has folded without ever getting off the ground and is rethinking what it wants to do.

The Clearwater, FL-based company, which garnered attention with $9 promotional fares, suspended sales to all markets and is processing refunds to some 4,000 customers.

Service was originally supposed to begin July 13, connecting Toledo, OH, South Bend, IN, Lansing, MI and Melbourne, FL, with Newark, NJ. But JetAmerica announced July 2 that it was delaying the launch of flight operations until Aug. 14 and refunding its first $500,000 in sales because of problems securing landing slots at Newark Liberty International from other airlines.

The airline then said in a July 17 press release:

"We are reluctantly suspending our public charter operations effective today. Finalizing the slots required to support our charter program at Newark has taken longer than expected and we have decided to suspend our flights in order to refocus on different markets," it said. "We still strongly believe that there is an unmet need for affordable air service to secondary markets and we look forward to offering this option again in the near future."

A spokesman for the company says JetAmerica would refund more than $900,000 in booked tickets. All customers are to receive refunds within 7-14 business days.

Bryan Glazer, a spokesman for JetAmerica, is quoted as saying: "This was unavoidable. I …know they did their very best to overcome the challenges that the slot situation posed. But in the end, the business plan never called for paying for more than a half million dollars for slots."

Still, Glazer suggests (as does the JetAmerica press release) that JetAmerica could make another attempt at launching a low-cost carrier. "Don't be surprised if JetAmerica comes back with new routes and new destinations," he said.

JetAmerica had aimed to begin flights from Toledo and Lansing to Newark Liberty International followed by flights from Newark to South Bend and Melbourne.

The low-cost airline’s game plan was to connect underserved mid-sized U.S. cities to the New York metro area through Newark Liberty International.

The air carrier blamed the FAA for the Newark service startup slip. “The primary reason for the delay is unforeseen complications with landing and takeoff slots at Newark Liberty International, JetAmerica’s Vice President of Operations Brian Burling said in early July. “In February 2009, the Federal Aviation Administration advised us, through an intermediary, that our operations at Newark could be accommodated. However…the FAA re-clarified its policy telling JetAmerica we would need to obtain slots,” according to Burling.

JetAmerica planned to initially fly 34 weekly flight segments starting on July 13. On August 14, the number of flights was to rise to 40 per week.

JetAmerica Chief Executive Officer John Weikle, who previously headed now-defunct Skybus, said at the time, “We feel terrible for the folks who booked with us for travel during the July 13 - August 13 timeframe, but the FAA’s change in the slot policy for indirect air carriers is beyond our control.”

Burling said: “People should not be quick to jump to negative conclusions about JetAmerica. I am particularly referring to internet bloggers and naysayers who are predicting the worst.”

To generate traffic, one-way fares started at $9 and top out at $199. The $9 price applied to the first nine to 19 seats on each plane. Passengers were charged $15 to check a bag. There were fees for food, drink and in-flight TV.

The carrier was starting out with one leased Boeing 737-800, expecting to add a second in the first month, and have as many as four by July of next year. Weikle's business plans called for adding an additional 189-seat airliner every four months

Airline officials had mentioned Baltimore, MD, Hartford, CT, Charleston, WV and Chicago Midway as possible new routes from Toledo that could be added during the next two years. JetAmerica said plans called for it to eventually add service to Rockford, II, Cincinnati, Columbus and Dayton, OH, as well as Pittsburgh, PA, Winston-Salem, NC, and St. Petersburg, FL.

JetAmerica bears little resemblance to most other airlines or even its predecessor, Skybus. In fact, JetAmerica is actually part of Sun America, an investment firm based in Clearwater.

Neither Sun America nor JetAmerica actually owns any airplanes or employs any crew. The actually flying part was to be done by Miami Air International, a company founded in 1990 as a charter carrier. Its customer base includes sports teams, major cruise lines, tour operators, educational and student groups, and political candidates. Miami Air currently operates seven B737-800 aircraft.

Consequently, what we have is essentially a ‘virtual’ airline with the “carrier” consisting of a marketing and administrative group that has contracted with a third-party operator to supply the actual flight services.

JetAmerica’s inability to operate at Newark International runs counter to efforts by the Bush Administration to inject fare-lowering competition via slot auctions at the New York area airports, including Newark International.

A federal court last year rejected the slot auctions, but the Bush Administration stood by its commitment to the concept. The outgoing transportation secretary said any plan to promote airline competition and help keep airfares low for consumers over the long haul must include market-based solutions. Caps alone are not the long-term solution, then DOT Secretary Mary Peters stated.

But the Obama team cancelled the Bush plan to auction off scarce takeoff and landing slots at the New York area airports following a strong backlash from airlines, industry groups, the General Accountability Office.

Air carriers operating at the airports would have been forced to give up 10% of their slots over the next five years. The slots would have been auctioned off to new entrants desiring to break into the market….air carriers like JetAmerica.