S.D.-Tucson Air Link Takes Off
Air Resorts Airlines of Carlsbad has grown steadily since its founding in 1978 by offering an expanding array of charter flights and freight deliveries.
But founder Ted Vallas, who is also the company’s president, says he has been itching to make a bold move, one that would allow Air Resorts to move into a new market and dramatically increase revenue.
On Monday, Vallas did just that by launching Air Resorts into the scheduled-flight business. The airline now operates flights from San Diego’s Lindbergh Field to Tucson on twice daily, nonstop flights.
Last year, the closely held company posted $7.2 million in revenues, Vallas said. But, by adding the San Diego-to-Tucson route and two other scheduled flight services, Vallas expects to double Air Resorts revenues by 1991. The company owns 14 airplanes.
Vallas’ decision to begin regular passenger service is an example of how some small air-service companies have seized an opportunity to generate revenue from minor routes abandoned by major airlines.
Recent mergers and acquisitions have consolidated the airline industry, Vallas said, leaving the survivors to hold on to heavily traveled routes and to discard those that are considered “only marginally profitable.”
In addition, the major airlines’ increasing emphasis on the “hub and spoke” system--funneling shorter flights into one “hub” airport, then loading those passengers onto a variety of long-distance flights--have caused them to lose interest in routes that don’t feed passengers into their “hubs.”
These factors, for example, played a role in the decisions by Republic and Pacific Southwest Airlines--both of which are now defunct--and Eastern Airlines to discontinue service between San Diego and Tucson several years ago. Air Resorts is the only airline now providing nonstop service between San Diego and Tucson.
Air Resorts is offering an introductory, one-way fare of $69 until July 15, according to Henry Voss, the airline’s general manager and senior vice president. Round-trip tickets purchased eight days in advance cost $98 or $108.
Competitor America West Airlines does not offer nonstop service, but it does have one direct flight daily between the two cities. The direct flight makes a brief stop in Phoenix before continuing to Tucson. A one-way, America West ticket purchased three days in advance costs $89. A round-trip ticket purchased seven days in advance costs $106.
Air Resorts officials point out that their one-way flight lasts 1 hour, 30 minutes; America West’s flight is 40 minutes longer.
“The only other way is to fly up or drive up to L.A. and then fly from L.A. to Tucson,” Voss said. “Those are pretty roundabout ways to get to Tucson.”
Although the major airlines have abandoned the San Diego-Tucson route, Voss said, there is still demand for such service. According to Voss, 102,000 trips were made between San Diego and Tucson in 1988.
“Tucson is a big city with a population over 500,000,” Voss said. “This is a (route) right in our back yards that provides a needed service for the businessman who has to travel from San Diego to Tucson to do a day’s worth of business and then come home.
“We can break even if we capture 25% of the trips that are taken,” Voss added. “It makes a lot of sense for us to do this.”
The recent mergers and acquisitions that have occurred in the airline industry have forced many of the major airlines to reassess existing routes and juggle newly acquired planes to the most profitable ones, said Vallas, Air Resorts’ president.
For example, PSA once offered nonstop service between San Diego and Tucson, Vallas said. But, when US Air acquired PSA, the bigger airline decided that PSA’s use of 135-seat planes for the route was not appropriate.
“This route provides a problem for the major airlines that have these big planes,” Vallas said. “There’s a need for this route, but not enough to fill a plane with 135 seats. But it’s profitable for a 48-seat plane like the ones we use.
“When some of these mergers were done, the bigger airlines often picked up equipment and used it to concentrate on their growth markets or to better feed their hubs,” Vallas said.
As the major airlines steer more traffic into their hubs, Vallas says, he and other small companies have an opportunity to capture “origination and destination” routes--those that do not travel thorough hubs. For example, a flight from San Diego to Tucson is an “O&D;” route because it bypasses a major city such as Phoenix, which serves as hub for some major airlines.
In addition to the San Diego-Tucson route, Vallas said, Air Resorts is expected to begin regular service between Los Angeles and the Grand Canyon in June, and offer a flight between Toronto and New York City in July.
Of the company’s 14 airplanes, four are Convair 580 turboprops that are used for charter and scheduled flight services. Each Convair 580 seats 48 passengers.
The remaining planes are Convair 340s and 440s--equipped with less powerful engines--that are used for shorter charter flights and freight delivery. Air Resorts expects to purchase five more Convair 580s for the expanded schedule.
