American Eagle now largest airline at LMM airport Expecting to carry 1.9 million passengers this year, it has 1,500 employees and contributes $60 million annually to the local economy; no plans to bring much-needed regional jets to Caribbean CARIBBEAN BUSINESS October 17, 2002 By JOHN COLLINS Though there are still some weak areas in its recovery in the Caribbean since 9/11, San Juan-based American Eagle / Executive Airlines has adapted and is expecting to carry 1.9 million passengers by year's end, said Gary Ellmer, the airline's president. A veteran of the aviation industry, Ellmer came to his new assignment Aug. 1 from Logan International Airport in Boston, where he was in charge of American Eagle's operations for four years following eight years as head of the Logan-based commuter carrier Business Express. Ellmer spoke to CARIBBEAN BUSINESS in an exclusive interview at Luis Muñoz Marin International Airport (LMM) in Carolina. He was joined by Pedro Fabregas, American Eagle's (AE) sales, marketing & planning director. When asked to compare his assignments in Boston and Puerto Rico, Ellmer quipped, "Well, I know there won't be any de-icing this winter." Besides different weather, he's learning Puerto Rico and the Caribbean "also have different pricing and a different clientele." "We have 1,500 of the finest employees in the industry, with 1,200 at LMM and another 325 around the region in our extensive network, which includes 23 destinations," said Ellmer. AE commenced operations in 1986. After Executive Airlines joined the AE system in 1986, it became a subsidiary of AMR Eagle in 1989. Ellmer is proud of AE's significant contribution to Puerto Rico's economy; he pointed to an annual payroll of $35 million and local purchases of fuel & parts of $24 million a year. "Of course, that total, approaching $60 million, doesn't include the trickle-down into the local economy through hotels, meals, taxis, and other purchases by our passengers. We also maintain our maintenance facility at Muñiz Base at LMM," Ellmer said. Thirty-five aircraft based at LMM AE now has 35 aircraft assigned to LMM, including 22 ATR-72s and 13 of the smaller ATR-42s. The original plan was to have only the larger aircraft, but the limited runway lengths at some of the airports in the region--such as Anguilla, Beef Island in the British Virgin Islands (BVI), and Canouan in St. Vincent & the Grenadines (SVG)--require the smaller planes, Ellmer explained. Asked about passenger concerns about the absence of regional jets serving some of AE's more distant destinations, such as Aruba, Barbados and Trinidad, Ellmer indicated the matter is under evaluation. He declined, however, to say when or if they would be introduced to the region. Industry sources, however, recall that has been AE's answer for years. They point to service by small commuter jets in other AE regional markets in the U.S. and suggest AE is unlikely to follow suit in the Caribbean because it has here a captive market and will continue as is unless forced to change by competitive factors. AE had 134 daily departures in the region as of August, with 68 of them from LMM. Fabregas explained that when the winter schedule commences in December, the figure will increase to 174 daily departures throughout the region. Though AE's primary function is to provide passenger service, Fabregas noted that last year it also carried more than 1.5 million pounds of cargo. "We are looking at ways to grow and to be an even bigger player in Puerto Rico and the Caribbean," said Ellmer. "We want to see what more we can do to benefit everyone concerned." Caribbean definitely a growth area "We definitely see the Caribbean as a growth area and we aren't going to shy away from competition," said Ellmer. "We know this market and we understand what our passengers want. We do a good job and our on-time performance can't be beat. In addition, American Airlines is a powerful partner, producing the majority of our passengers. Our marketing power in selling the Caribbean is much better than that of any of the other airlines, so we aren't concerned about increased competition." Ellmer frankly discussed the continuing shakeout in aviation in the eastern Caribbean, which started even before 9/11. On the one hand, a number of airlines have initiated direct flights from their U.S. gateways to a number of destinations currently served by AE out of San Juan. They include US Airways, Delta, and Pan Am. On the other hand, a number of smaller airlines have increased their service regionally, including some that challenge AE in its own San Juan backyard, among them Air Santo Domingo, LIAT, and Nevis Express. There are also reports Caribbean Star wants to come into San Juan and Guadeloupe-based Air Caraibe wants to increase its regional service. Even its critics concede AE has developed into a powerful machine in the Caribbean, and some wonder if any other airline of any size has the clout to challenge it. Its supporters, meanwhile, acknowledge AE has made some mistakes along the way. There aren't many examples, but among them are two failed attempts to fly from San Juan into Haiti; AE pulled out because of the chronically unsettled situation there and the lack of tourism. AE also pioneered direct flights from San Juan to Tobago, only to abandon Tobago a few years later because of the destination's alleged inability to market itself in the U.S. Then, there was the service to St. Vincent, a route on which AE experienced high passenger volume, not by tourists but by Vincentians traveling to and from the U.S. and the U.S. Virgin Islands. AE was forced to suspend service at St. Vincent after the Federal Aviation Administration issued a safety warning over wind-shear factors at the airport. Like many others in the business in the Caribbean, Ellmer is acutely aware of the possibility of travel between the U.S. and Cuba being normalized. "Cuba has emerged as a major player in Caribbean tourism," Ellmer said. "Any opening or normalization of travel restrictions between the U.S. and Cuba would result in a whole lot more travel by Americans to that country--and when that occurs, AE will be there to provide service." Inadequate infrastructure in some destinations a challenge Some of the airports served by American Eagle (AE) in the region are in top-notch shape, but others have infrastructures that represent challenges for the airline, according to AE President Gary Ellmer. "The British Virgin Islands, for instance, got a loan and has extended the length of its runway to 6,000 feet," said Pedro Fabregas, AE's sales, marketing & planning director. "We should be operating there by February with the ATR-72 aircraft." "We are following Anguilla Chief Minister Osbourne Fleming's efforts to obtain a loan from the British to extend the airport there," said Fabregas. "Anguilla is a destination growing in popularity for us and, starting Dec. 13, we will have four flights daily." Nevis is aggressively courting AE to commence direct service from San Juan. Although it is currently served by three smaller airlines, AE has always been the principal beneficiary of the guests traveling to and from the posh Four Seasons Resort there. Right now, they must take an AE flight to St. Kitts and then a ferry ride to Nevis. Premier Vance Amory of Nevis, which has considerable autonomy in the Federation of St. Kitts & Nevis, wants the Nevis airport expanded to accommodate direct flights from San Juan. Though industry observers indicate this development could dilute the AE traffic to St. Kitts out of San Juan in the short term, it should balance out after a massive Marriott resort, expected to have more than 900 rooms, opens its first phase in December. Indicating that Four Seasons "is very important to AE," Ellmer said, "We are currently evaluating service to Nevis." He declined to say, however, when service might commence. AE's consistently high passenger volume at three destinations in the eastern Caribbean is attributable not to tourist or ethnic traffic but to students. They are Dominica, Grenada, and St. Kitts, where offshore medical schools have attracted hundreds of students who travel back and forth between the U.S. and elsewhere. Two dozen destinations: some big, some small, all different The five airports in the Dominican Republic (D.R.) collectively represent the principal destination of American Eagle (AE) in the Caribbean. They are the Peña Gomez Las Americas International Airport (Santo Domingo), La Romana, Puerto Plata, Punta Cana, and Santiago. "That reflects how popular the D.R. has become," said AE President Gary Ellmer. Pedro Fabregas, AE's sales, marketing & planning director, went further, ticking off the number of daily flights to the D.R. anticipated for the Christmas season: six each to Punta Cana and Santo Domingo, four to Santiago, and three each to La Romana and Puerto Plata. After the five destinations in the D.R. are the two airports in the U.S. Virgin Islands (USVI)--St. Croix and St. Thomas--which together account for 17% of AE's passenger volume. Following those are, in descending order, St. Lucia, Beef Island (British Virgin Islands), Anguilla, and St. Kitts. Destinations growing in popularity, according to Ellmer, are the ABC islands in the southern Caribbean; AE has daily flights to Aruba, two flights a week to Bonaire (daily service starts in December), and three flights a week to Curaçao (going to four weekly in December). Trinidad, about 615 miles southeast of Puerto Rico, is the most distant destination in the region served by AE. The country has a population of 1.3 million with relatively high income and also has large immigrant communities in North America. Since Trinidad has a modest tourism industry, AE's passengers on that route are mainly nationals and business travelers. The airline has daily service out of San Juan, but that is a destination marked by peaks and valleys, meaning periods of high (such as Carnival in February and Christmas) and low passenger volume. "Sometimes during Carnival, we have to schedule three daily flights," said Fabregas. _________________________________________________________________ STOP MORE SPAM with the new MSN 8 and get 2 months FREE* http://join.msn.com/?page=features/junkmail