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HeartLand Airlines

Mon Oct 23, 2000 12:13 pm

Dear All,

What have you read about HeartLand Airlines, the new startup trying to set up a Midwest Express-like operation at Dayton? A group of local businessmen has hired Piedmont's William Davis (or is it Howard--pls forgive my Alzheimer's) out of retirement, and has ordered four Boeing 717's. They are seeking to lease two more, from ILFC I think. Apparently their goal is to get $55 million in funding but they are far short at this point. HeartLand aims to start flying next spring.

The idea is to fly major routes that Piedmont had at their old DAY hub before US Airways got irked at the competition, bought PI out in 1987, and shut the hub down. EG New York, Los Angeles, Chicago, etc. The planes will be configured with 88 seats in an all-business class arrangement. Fares would be competitive with the oligopoly carriers' economy class. I haven't seen anything about fresh-baked chocolate chip cookies yet but wouldn't be surprised if they are offered. :+)

I'd like the idea very much if I lived in Dayton. But Dayton doesn't have near the population base from which Midwest Express can draw at Milwaukee. And MWX got established there before setting up sub-hubs at OMA and MCI. (I hear one is planned for DSM--is this true?) I'd give HeartLand a 60-70 percent chance of getting off the ground but about a 45 percent chance of survival.

What has everyone else heard about HeartLand?

Jim K.
Washington, DC

Need a new airline paint scheme? Better call Saul! (Bass that is)

RE: HeartLand Airlines

Mon Oct 23, 2000 10:49 pm

HeartLand and Legend are products of MIDEX management clones. Each airline can claim 3 former-MIDEX executives each. These are high caliber, high energy individuals with a lot of business savvy--especially the airlines.

The biggest hurdle for Heartland will be developing a market, and we had this discussion earlier. DAY could be a hard-case, but if the airline develops loyalty with the business people--it could take off. YX capitalized on MKE hometown loyalty over the years and became successful. To be honest, a lot of people didn't think that non-flamboyant MKE would support such a "fancy first class" airline in YX, but it worked. Then again, YX had Kimberly Clark bankrolling it for years.

Second issue. I hope that the 717 was the right choice of aircraft. There is all this hype here on the board that "new is better", but maybe an older model airframe such as the DC-9 would have made more sense. The -9 is not a mx hungry aircraft--contrary to popular belief, and is extremely reliable. Acquiring one outright is not at all cost prohibitive, and leasing is a very inexpensive option.

I am not sure what the terms on a 717 lease will be, but I'm sure it's not cheap. If you look at an example, Vanguard also attempted to start up with newer 737s and look where it is now--fighting for its very survival with older 200 series.

Last issue is purely a tangential one (and I'm good at those), since you raised the question.

Politics played a role in YX's decision to come into DSM. Tom Harkin, a very influential senator was thrilled to death when YX announced it would start jet service in DSM after Access went belly up. The problems arose when slots were awarded into DCA. As it turned out, only one non-stop into DCA from DSM was awarded. As you know, that doesn't make much business sense. Most everybody in business wants to return the same day. As it stands now, the only non-stops from DSM are to MKE and IND--with connecting service to LGA. There won't be any more significant movement in DSM until more slots can be acquried and aircraft freed up when MCI kicks into business. You won't see a mini-hub in DSM, but IND is becoming a focal point.

RE: HeartLand Airlines

Tue Oct 24, 2000 2:31 am

I haven't seen any mention besides from this forum of this new Heartland buying any 717s. They don't have any money yet. Am I correct?

I don't think the country sees a tremendous need for more first class product and also if the economy in the next 4-5 years does, as it invariable will, slow down, the public will be searching for the lowest possible airfare, than Heartland will see itself in a tight situation.

The days of PI's Dayton hub were quite different than the present. CO and DL weren't huge players at CLE and CVG as they have become recently.

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RE: HeartLand Airlines

Tue Oct 24, 2000 4:59 am

I agree, Russ. Also, to make a go of a whole first-class airline in a medium-size market, you need to get a hub going as Midwest Express did. Only after they had their MKE hub firmly established--in an O&D market considerably larger than Dayton BTW--did they start doing direct flights (and then only a few) from other Midwestern cities.

If HeartLand actually gets airborne, I wouldn't be surprised to see MidEx start offering service there, just to prevent another first-class carrier from getting established in its region. It's hard to imagine the Midwest supporting two MidEx'es.

The Piedmont hub was the fruit of a different airline industry, and I'm not sure the Dayton business folks understand that. The 1980's industry was spread out among many more carriers, who could profitably operate more hubs, at smaller cities. Dayton can't re-create an industry that non longer exists.

And if anything, Dayton (like any city) probably has a considerably larger market for low-fare service. They have AirTran right now. And I wouldn't be surprised to see Southwest start there in order to more effectively "bracket" Cincinnati without going head to head with Delta. CMH, IND and SDF are all two-hour drives from Cincy and DAY is about 65 minutes, with its own mid-size population base.

God bless HeartLand if they can succeed, but I don't think it's likely.

Need a new airline paint scheme? Better call Saul! (Bass that is)

RE: HeartLand Airlines

Tue Oct 24, 2000 5:09 am

Agreed, good assesment.
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Joined: Sat May 27, 2000 4:57 am

RE: HeartLand Airlines

Tue Oct 24, 2000 6:40 am

Well ... Columbus, Cincinnati, and Indianapolis are 70,63, and 111miles from DAY respectfully. WN pulls from a larger area usually. If they offer relatively cheap business class fare, and convienent scheduling I see no reason for it not to do ok. Nothing spectacular, but immenent failure 5 years or less. Economy is being turned to slow.... meaning it is still growing, that is the common misconception as TWA and DCA mentioned. just because the economy slows does not mean recession, it just means there is a slower growth rate. When the economy begins to shrink, watch out.

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