Air Transport World

The 'flexible flier'. (Tower Air Inc.)

NEW YORK - Just 10 years ago, when ATW first visited, Tower Air had just been transformed from a strange little duckling into a swan. Originally a travel agency specializing in Israel and Western Europe, it had evolved into a tour packager and wholesaler, then a tour operator using chartered aircraft and finally, in late 1983, an honest-to-goodness airline offering scheduled service on its own leased 747-100.

Today, JFK-based Tower, steered by co-founder Morris K. Nachtomi, operates 17 747-100s and dash 200s, offers scheduled and charter passenger and cargo services in the U.S. and abroad, and has a growing third-party-maintenance business.

Nachtomi says Tower's guiding principle is to "provide services in primarily long-haul markets, where our low operating cost structure permits profitable operation, while limiting our commitment of equipment, personnel and financial resources." Operating costs indeed are low, dropping to 4.63 [cents] per ASM in 1994 from 5.31 [cents] in 1993. Low costs enable Tower to match competitors' lowest restricted discount fares. But Tower's edge is that its fares have no restrictions and are available on a 1-way as well as round-trip basis. Nachtomi says Tower avoids flooding capacity into any market to the extent that competitors consider lowering their fares further, a lesson many niche operators have failed to learn.

The key to low operating costs is flexibility, Nachtomi says. This takes many forms, including "power by the hour" aircraft and engine leases, a comparable plan for flight crews, extensive use of part-timers and outsourcing.

Under PBH leases, Tower pays only for the block-to-block hours that aircraft are in use. However, it is responsible for operating costs, such as fuel, maintenance, ground handling and crew. …

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