"RJ's: Small jets may expand options"

Wednesday, June 26, 2002

Small jets may expand flying options in city
By Adam Wilmoth
The Oklahoman


New jet technology could provide cities such as Oklahoma City with more
direct flights to distant cities.

Small jets always have been able to fly profitably with fewer passengers
than big jets, but the new generation of small jets can fly almost as far as
the big jets -- opening up possibilities for smaller cities that have been
shunned by the hub-and-spoke system.

As a result of the technology, Continental Airlines recently announced that
beginning Nov. 1 it would fly one of its new small jets twice daily from
Oklahoma City to Newark, N.J., which is a 20-minute train ride to Manhattan.

That flight goes a long way toward quenching Oklahoma City's long thirst for
a direct flight to the East Coast.

For now, that Continental flight is the only one that's been announced for
Oklahoma. But experts suggested that more announcements of that kind seem
inevitable, especially as new issues of the small jets roll off the assembly
line.

"I think we will get our share," said Luther Trent, director of the Oklahoma
City Airport Trust. "There will be cities identified as good for the
regional jet market, but the manufacturers are limited to the number of
regional jets they can put out in the market in the next few years just
because of the limitations in their manufacturing capabilities."

Richard Burpee, executive director of the Greater Oklahoma City Chamber of
Commerce, said the new jets could spell the end of the hub-and-spoke system.

"I've always been against the hubs anyway," he said. "It seems to me that if
you have to double handle the people, it doesn't make sense. You have to
give them your tickets and luggage and go through security in Oklahoma City.
Then you get to Dallas and have to start all over."

The future of the hub system has been debated recently in various trade
magazines and airline industry circles, but while extended- range jets may
bring significant changes to the industry, Joel R. Denney, an analyst with
U.S. Bancorp Piper Jaffray Fixed Income, said it is unlikely that the hub-
and-spoke system will disappear anytime soon.

"The regional jets mainly are strengthening the hub and spoke network," he
said. "You're taking longer flights, but they are regional jets that are
pulling them into the hubs. If someone were to take Northwest Airlines from
a city like Oklahoma City to Detroit, it would be easy to then hop on a
plane to the East Coast or wherever you want to go."

Airlines had hoped to be using more regional jets by now, but the effects of
Sept. 11 and the recession have pushed back that timetable. However, Denney
said extended-range regional jets will be the strongest growth for the
airlines in the near future.

In the past two months, Continental has announced new nonstop flights from
Newark to Oklahoma City and Omaha, Neb., as well as from Houston to
Richmond, Va., Palm Springs, Fla., and Villahermosa, Mexico.

Those flights will be on the new 50-passenger, extended range Embraer
ERJ-145 ExpressJets, which can travel up to 1,500 miles. The airline has
ordered 104 of the new jets.

Regional service for United Airlines is conducted by Air Wisconsin and Sky
West. Each airline is adding Bombardier CRJ-200s, which are 50-seat jets
capable of traveling up to 1,500 miles. American Airlines has ordered 25 new
Bombardier CRJ 700 jets, which have 70 seats and can travel up to 1,300
miles.

The extended-range jets have reinforced fuselages, which allows them to
carry more fuel. They also have upgraded engines and an auxiliary fuel tank
in the wings.

"The regional jet is an excellent aircraft, and it allows you to fly longer
routes more economically. But a regional jet will not make a bad route
profitable," Denney said. "It may allow (an airline) company to offer a
route that it can't justify flying with a full-size jet, or it could help
them increase routes. But it will not make a bad route profitable."

And good routes are defined by the number of travelers, especially business
travelers, he said.

"In general, it's more a case of the economics of travelers," he said. "No
matter how much you market that to an airline, the numbers are going to be
the deciding factor. If you can't get the people to the airports and on the
airlines, they are not going to get the flights."

Oklahoma City mayor Kirk Humphreys said he believes Oklahoma City has the
business travelers to support multiple direct flights to the coasts.

"One of the greatest economic challenges we have in recruiting companies to
Oklahoma and in existing companies recruiting talent and moving people here
is the negative impact of getting here," he said. "It's particularly
frustrating going through Dallas because you get close, but are still 21/2
hours away by car. I think that will enhance our ability to bring people
here if we have convenient nonstop daily service."

Continental Airlines has ordered 104 extended-range regional jets and has
the option to order more than 100 more, said Continental spokesman Jeffrey
Awalt. He said the airline expects to use the new regional jets to create a
kind of spoke that connects smaller cities directly to its major hubs.

"If there's a market that will support larger jets, that's the preference,
but the regional jets are often used to fly on what we call long and thin
routes -- those are the routes between cites that are too distant to use
turboprops, but don't have the customer demand to justify flying the larger
jets," he said.

"The ability to use the regional jets to fly the smaller markets or
less-established markets has allowed us to broaden the scope of cities with
service feeding into our major hubs."

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