Printed headline: CommutAir
Subodh Karnik, CommutAir president and CEO, talked with Lee Ann Shay on Aug. 20 about transitioning the regional airline from a turboprop- based carrier to jets and tripling the size of its fleet.
CommutAir plans to triple its fleet through 2019. What’s the delivery rate for the aircraft?
We have the MRO capability to handle 3-4 aircraft per month, but right now we’re taking about 1.5 per month. Our constraint is our ability to recruit and retain pilots. That’s the long pole in the tent and our only limitation to how quickly we can grow. Assuming that it takes 10 pilots to staff an airplane—five in each seat—we are netting about 15 pilots per month after attrition and the flow to United under the Career Path Program. We are gradually increasing our incoming pilots, and our goal is to get to 30 per month by mid next year, which will allow us to induct about 2.5 aircraft per month.
Where are the ERJ 145s coming from?
We are getting the used ERJ 145s from United. The aircraft then go through a conformity process and an inspection, which is about a 200-300-labor-hour project that takes about five days.
How is the airline preparing for the bigger fleet from an operations perspective, and from a maintenance and engineering perspective?
We used to be a little airline with rudimentary functions. We’ve grown significantly and have already tripled the size of the engineering department. There has been massive technology infrastructure investment. Among our biggest investments has been in the maintenance management system. It’s almost at the end of its first phase of implementation, and it is a big, big project. We’ve also made major changes to our vendor relationships, whether it’s AAR or Embraer or Rolls-Royce. We used to be much more of an in-house fix-it airline; now our focus is shifting to vendor management. We also expanded our maintenance training department, including bringing some of the training in-house so we can customize it, which accelerates our ability to get technicians up to speed on our aircraft and our systems at the same time.
We’ve doubled the size of our maintenance workforce. Our bases are becoming bigger, too. Where we had 10 people—a manager and mechanics—we now have tech leads, supervisors and all the gradations as we’ve become a larger organization in every way.
What maintenance system are you investing in, and how is it working?
We acquired AMOS a few years ago, and we’ve been building the other legs of the stool: planning, materials, finance, etc. We’re about at the halfway stage to full implementation—when you press a button and all sorts of magic happens—when it’s used for all planning and analysis and it becomes the system.
How much has the airline invested to make everything from aircraft to new bases and training possible?
We are roughly a $100 million airline. Aside from the volume-based increases to staff, we’ve added 15-plus staff functions, such as quality engineering. Now we’ve got a staff hierarchy in place, which adds a few million dollars. We had to build our material from scratch, as well as ground support equipment (GSE), so that’s several million dollars. Most of our focus has been to work with third parties as much as we can on power-by-the-hour-type agreements with vendors such as AAR and Embraer. We’ve taken a managed-fee approach and have lowered our upfront asset costs on things such as rotables. So it’s a multi-million-dollar investment in people, materials, GSE and vendor relationships
How is the shift to more outsourced work going? Are there any areas where you are seeking vendors now?
That process has been a learning experience, as we’ve transitioned from fixing something to managing somebody who fixes it. It’s a little bit of an art.
You now operate an all-Embraer ERJ 145 fleet since retiring the Bombardier Dash 8s in January. How is the fleet performing?
If you look at our reliability measured by controllable dispatch reliability and operations, we just finished our longest 100% streak—141 days. Compared to other operators for United, we are doing very well. I think the previous streak was about 90 days. The props (Dash 8s) had a history of hiccupping in bad weather.
What was the driver to switch to the all-jet fleet?
It was a fleet-planning decision. The number of ultra-short markets out of Newark and Washington Dulles is limited and people prefer jets. So after we signed the deal with United to grow, we decided to grow with jets and one fleet type due to the efficiencies that brings.
We reached 29 aircraft last year, both jets and props, but we retired the Dash 8s and took a dip, so now we’ve gone beyond the peak that we had reached.
A lot of this fleet activity is based on a memorandum of understanding with United Airlines announced about a year ago. Could CommutAir’s flying for United further expand?
All of our conversations with United indicate we could further expand. We started at 40 aircraft and then kicked in another 20, at the same time getting rid of the props. By the time we start getting close to 60, we’ll talk with United about what we could do next.
Since United purchased a 40% stake in CommutAir, has anything changed besides the fleet—or was it pretty much a cash infusion?
It was primarily a cash infusion for the transition. Because two out of our five board members are from United, there is more transparency in what we do instead of the typical arm’s-length arrangement. In addition to the dollars, we’ve been getting massive support from them on many fronts—from crew scheduling to aircraft lease returns.
Were all the Dash 8s leased and have you returned them all?
Yes, we leased five Bombardier Q300s and had 16 Q200s. The Q300s were from Bank of America and the Q200s were from Elix Aviation Capital. The Q300s were returned last year. Those were our first lease returns, so there were some normal teething issues. On the Q200s, the remediation and returns are going fairly smoothly—there’s a little gray area between European Aviation Safety Agency standards and FAA standards, but that’s all being worked out. The last one is due to go back in November.
What’s your outlook for the airline over the next three years?
In Phase 1, we want to grow to 60 aircraft in 2019-20. Phase 2 is to negotiate with United for the next tranche of our growth. We will add MRO and flying bases as we grow. We have some major technology infrastructure projects underway to execute over the next three years—from refreshing core systems to providing electronic flight bags for pilots and hand-helds for mechanics. But step one is to get the props out of our system. Then we can accelerate our growth in a more focused way.
CommutAir Fact File
Quantity of Aircraft: 29, with monthly aircraft deliveries
Aircraft fleet by model/type: Embraer ERJ-145XR
Average fleet age: 13 years
Average flight length: 1.5 hr
Number of airports serviced: ~36
Headquarters: North Olmsted, Ohio
Facilities: Albany (ALB), Newark (EWR), Washington Dulles (IAD)
Ownership: Champlain Enterprises (60%) and United Airlines (40%), as of 2016