Air Transport World

Air 1 expansion planned to attain profits.

St. Louis--Seeing is believing. Air 1 advertises first-class service at coach prices, but consumers have grown wary of the ways of airline advertising, where attractive claims made in the headline are so often modified by an asterisk and exceptions in the small print. Therefore it's a welcome surprise to fly Air 1 and find that everything is an advertised.

Take as an example the New York service from Newark International to the airline's hub at Lambert Field, St. Louis. From the complimentary limousine pickup from anywhere in mid or downtown Manhattan, to the pre-selection of entree and beverage at the check-in counter, to the roomy leather seats, to the meals served course-by-course on china dishes with attractive utensils and linen, to the free beverages, including champagne, the service is truly first class. The return flight, as well, offers complimentary limousine service to manhattan. The airline's current fleet of Boeing 727-100s and dash 200s is configured generously with 76 and 94 seats, respectively, arranged two-by-two.

The big question is, "How can Air 1 make money operating this way?" It's a question ATW asked president and CEO Mark G. Morris on our recent visit to Air 1's headquarters. The answer is in two parts. First, up to now it hasn't; Air 1 lost $6 million on revenues of $9.2 million in the first calender quarter of 1984, on top of a $4.9 million loss on revenues of }8.5 million in the last quarter of 1983. The second is that, even with its low-density seating and high-quality service, it will require a load factor of only 58% to break even, according to Morris, and he expects to attain this by the end of the year if current fare levels hold. By that time, addition of new routes, build-up of other recently opened routes, increased weekend service, expansion of the 727-200 fleet and higher utilization will bring systemwide available seat-mile costs down to 10.76^, Morris says.

Like other recent startups--Air 1 inaugurated scheduled service April 1, 1983--the carrier is not unionized and benefits from relatively low wage scales; for example, pilots receive $36,000 per year, flight attendants $13,000. However, they took forward hopefully to the day when they will reap rewards from the company's profit-sharing plan, which covers all employes except top executives.

Air 1 currently flies from its St. Louis hub to Newark (five daily nonstop round-trips), to Dallas/Ft. …

Log in to your account to read this article – and millions more.