"Hooters Air defies skeptics, finds a spot as niche carrier"

Tuesday, October 4, 2005

Hooters Air defies skeptics, finds a spot as niche carrier
Who'd have thought?
By KIRSTEN TAGAMI
The Atlanta (GA) Journal-Constitution


It seemed like a joke when Hooters Air launched 2 1/2 years ago.

"A restaurant getting into the airline business?" one traveler at
Hartsfield-Jackson International Airport, Kary LeBlanc, said at the time.

To make matters worse, the defiantly tacky Atlanta-based restaurant chain -
best known for its "Hooters Girls," in snug tank tops and orange hot pants -
couldn't have picked a worse time to get into the business than the
post-9/11 travel slump.

"I thought it was a gag, that it would never last," said New York-based
airline industry consultant Robert Mann.

Hooters Air has not only lasted, it's grown. The carrier quietly keeps
adding flights, linking such places as Gary, Ind., and Allentown, Pa., with
Orlando and Myrtle Beach, S.C., hometown of company founder Bob Brooks.

Because the carrier flies to so many satellite airports, only a few Hooters
Air flights compete directly with Delta, AirTran or other commercial
airlines.

Mann has tentatively revised his opinion of the start-up, technically
classified a "public charter" carrier that takes reservations from
individuals directly on its Web site. There are some advantages to being a
charter, including fewer financial regulations, said Mann. Charters are,
however, subject to the same safety regulations as commercial airlines.

"If they do a good job for people and are predictable, maybe it has more
legs than a lot of people gave them credit for," Mann said.

Hooters Air now flies to 15 cities, including Nassau, Bahamas, and is eyeing
other destinations in the United States and abroad, said its president, Mark
Peterson.

The airline offers low fares - lower than competitors' in many cases,
although they tend to use different airports. Hooters also has roomy leather
seats and inflight entertainment in the form of two scantily clad waitresses
- in addition to the usual number of trained flight attendants.

Peterson rejects the suggestion that Hooters Air aims to become a
small-scale, blue-collar JetBlue.

"We're not in this to take on the Southwests and the JetBlues of the world,"
he said. "If we can find something that works for Hooters and use the brand
to provide some additional revenue, then that's what we'll do."

Hooters Air's goal is to make money, not merely serve the marketing
interests of the larger organization, he said.

Hooters also owns a 15-year-old airline called Pace, which specializes in
high-end charters for groups like pro sports teams. Pace holds the operating
certificates for both carriers. In filings with the federal Department of
Transportation, Hooters' financial results aren't separated from those of
Pace. In the first six months of the year, Pace had operating revenue of $26
million and posted a loss of $1.7 million.

One unusual consideration in adding Hooters Air destinations: whether the
airport is near a lot of Hooters restaurants.

"Florida is a big market, Chicago is a big market," Peterson said. "If a
place is a great Hooters market and we can provide some air service that
hasn't been there before, and a better travel experience, then we'll look at
starting service there."

Which raises the question: Is this an airline or a marketing tool for the
restaurants?

Veteran marketing consultant Andrew Pierce, for one, is puzzled.

"An airline is a high-risk business model, especially in this climate, and
it's not a natural brand extension," said Pierce, a senior partner at the
consulting firm Prophet.

"Even if you stretch it a little and say Hooters wants to be a 'lifestyle
brand,' is an airline a part of that lifestyle? I don't think so."

Europe's Virgin is one example of a company that was able to sustain a
low-cost airline, but Virgin's brand was more established, he said.

"You can see an airline for them. Their image is brash, rock 'n' roll,
challenging conventional wisdom," said Pierce.

Hooters has carved out a small niche serving third-tier markets such as
Scranton, Pa., and Rockford, Ill. Small airports have some clear advantages,
notes Peterson.

For example, "at both of our Chicago-area airports, the parking is free. You
get into the airport and, hey, there are no lines," he said.

Hooters Air is an example of a resurgence of charter airlines, which were
very popular during the 1970s but were killed off by deregulation, which had
the effect of lowering prices on the major airlines.

Back then, tickets were sold to groups. Hooters Air also sells a lot of
seats through Myrtle Beach National, which owns a golf course and resort,
said Mann.

But passengers also buy tickets directly on www.hootersair.com.

Apparently, Hooters has found a model that works, but the growth potential
is limited, according to Mann.

"I'm sure if you started a NASCAR airline, you'd get a lot of business. The
question is, are they flying somewhere I want to go at a time that's
convenient for me? It's still a fairly narrow market."

HOOTERS HISTORY

   . Owned by Bob Brooks' Atlanta-based Hooters of America restaurant chain

   . First flight was Atlanta-Myrtle Beach, S.C., on March 6, 2003

   . Now flies to 15 destinations: Atlanta; Allentown, Pa.;
Baltimore/Washington; Chicago-Rockford; Columbus, Ohio; Denver; Fort
Lauderdale, Fla.; Gary, Ind.; Las Vegas; Myrtle Beach, S.C.; Nassau,
Bahamas; Newark, N.J.; Orlando; Pittsburgh; St. Petersburg/Clearwater, Fla.
Wilkes-Barre, Pa. to be added in late October.

   . All-Boeing fleet of 737s and 757s

   . One-class service with leather seats and 34-inch legroom (2 to 4 more
inches than typical coach seating)


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