Sunday, July 03, 2016

First impression: First-rate Contour’s first 90 days of air service in Tupelo met with praise

Kathryn's Report:

Donna Sanderson, from left, Pam Minor and Tracy Pharr each bought $19 specially priced one-way tickets from Tupelo to Nashville, taking advantage of a promotion by Contour Airlines so they could take a “girls’ trip” to the city.

TUPELO – Pam Minor, Tracy Pharr and Donna Sanderson decided to take a girls’ trip to Nashville last week, taking advantage of a special promotion by Contour Airlines.

“We just wanted to get away, and we’ve been looking forward to the trip,” Pharr said.

The trio each bought $19 specially priced one-way tickets from Tupelo to Nashville, offered by Contour to entice passengers to its new service.

The nine-seat, twin-engine Jetstream plane took off from Tupelo at 9:01 a.m. Wednesday and landed 42 minutes later.

Within 5 minutes, they were walking toward gate B-10 at Nashville International Airport.

“It was fantastic,” Sanderson said of the flight.

“And,” added Minor, “look at the money we saved and the time we saved not having to drive.”

Other passengers have made similar comments during the past three months.

Airline and airport officials knew they had to get the public interested in flying out of Tupelo Regional Airport following three years of poor service provided by two previous airlines.

Their plan has worked well so far.

Matt Chaifetz, left, CEO of Corporate Flight Management, the parent company of Contour, says sales during the promotional period have exceeded expectations.

While the initial promotional period is over, Contour has sold some 6,000 tickets so far, ranging in price from $19 to $79. The higher price is for refundable tickets.

“We’ve doubled the number we thought we’d sell at this point,” said Matt Chaifetz, the CEO of Corporate Flight Management, the parent of Contour.

Providing superior customer service – centered around getting people between Tupelo and Nashville on time – has been Contour’s focus from the beginning.

Sometimes it means going a step farther.

Like waiting an extra 10 minutes for its very first passenger from Nashville, whose in-bound flight on another carrier was late. Or flying an octogenarian for his first-ever flight. Or giving a young boy who’d never been in a plane a tour and allowing him to sit in the cockpit.

The 9 a.m. flight last Wednesday morning to Nashville had seven of its nine seats filled. The return flight had eight passengers. The outgoing passengers also had Scarlet’s donuts and bottled water waiting for them.

CFM believed it was a good fit for Tupelo to provide air service, and vice-versa. And air service was not new for CFM.

The company was founded in 1982, providing aircraft management and charter services. It has two fixed-based operations in Smyrna, Tennessee, where it also has a certified repair facility, aircraft sales division and pilot and maintenance training.

Having provided federally funded Alternate Essential Air Service in Michigan and Texas, CFM saw Tupelo as a good complement.

“We had spare capacity in our Jetstream fleet,” Chaifetz said. “I felt strongly this was a great springboard for us because it’s in our backyard. And especially for some of the stuff that comes along with it. Like being able to hire our own people and interact with them regularly.”

A hands-on CEO, Chaifetz has no office at the company’s headquarters in Smyrna. He is on the move constantly, visiting various offices, going to the maintenance shop, checking in on every aspect of the operation.

He even picked the carpet for a corporate jet being renovated for a client.

His attention to detail includes keeping track of its Tupelo-Nashville service, which Contour is being paid more than $4.2 million a year for two years to provide.

He admits – and the U.S. Department of Transportation noted – that CFM/Contour’s bid for service was higher.

“But you get what you pay for,” an unapologetic Chaifetz says. “And I think we’ve proven that.”

Contour’s subsidy through the Essential Air Service program allows a 5 percent profit. CFM estimates $686,000 in passenger revenue through ticket sales (with prices averaging $49 per ticket).

Expenses total more than $4.7 million, covering fuel, maintenance, pilot costs, aircraft fixed costs and other indirect costs. The $4.2 million subsidy gives CFM a profit of about $237,000. Contour gets paid only for flights completed.

Also critical for continued air service is that the subsidy averages to about $200 per passenger. That means seven of the nine seats on any given flight need to be filled. So far, it is averaging about 6.5 passengers per flight.

Very, very close.

But, Chaifetz said, “It’s not all about the stats; it’s about building relationships with your customers and your community.”

Do that, and the customers will buy tickets and build those numbers.

Tupelo Airport Authority member Jim Newman says Contour “has done very well. Certainly their on-time performance and completion of flights is impressive.”

In May, Contour completed all of its flights on time. In June, it would have been another perfect report, but a couple of weather delays kept that from happening.

Chaifetz believes there’s no reason not to have good air service in Tupelo.

“We’re not dealing with 150 customers – we’re dealing with nine people at a time, so there’s time for that interpersonal relationship,” he said.

There have been suggestions that Tupelo would be better served with a connection to Atlanta, but that was not a viable option for CFM/Contour.

“It’s a longer flight, it’s more expensive, which means more subsidy,” Chaifetz said. “That makes it harder to get the subsidy cap to $200 per passenger. … we’re focused on getting Tupelo under the cap. When you add expenses, that’s that many more passengers to do it with. I just don’t know if that’s possible.”

An airline industry consultant told Chaifetz there has never been a nine-seat plane operator to ever average more than having 70 percent of its seats filled, and if Atlanta were the destination, essentially every seat on every flight needs to be filled.

So, Nashville is only viable connection for now. After all, it does have 40 active gates across three concourses at its terminal, with eight airlines offering nearly 400 daily nonstop flights across the country.

And Contour’s success is not dependent on the mix of business traveler or leisure travelers.

“It doesn’t matter – we just want to have the traffic,” Chaifetz said. “The business travelers might want Atlanta, but business travel isn’t stimulated by low fares. We can get people going to a destination city like Nashville with low fares, people who maybe have no reason to travel. Nashville is the stronger tourist destination.”

Newman would like to see a connection to Atlanta made eventually, but knows getting under the subsidy cap is the first step.

“Let’s get there first, then talk about options,” he said.

Original article can be found here:

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