Gulfstream eyes more opportunities in northern US

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Gulfstream International Airlines is looking to expand outside its traditional territory of Florida and the Bahamas using its fleet of Raytheon Beechcraft 1900D turboprops.

Gulfstream CEO David Hackett says that after establishing a small operation in Cleveland earlier this month the carrier is "beginning to look at more opportunities north".

Gulfstream launched services in early September from Cleveland through a codeshare with Continental Airlines to Dubois and Franklin in Pennsylvania and Lewisburg, West Virginia. It plans to add at the beginning of October flights from Cleveland to Bradford in Pennsylvania and Jamestown in New York.

Hackett says the new services at Cleveland, where it receives subsidies as part of the US DOT's essential air service program, represent Gulfstream's first foray in the US outside Florida. But he adds as US carriers continue to slash capacity on domestic regional routes, more opportunities are created for operators with smaller equipment.

"You can backfill those routes," Hackett told last week's Cargo Facts aircraft symposium. "We're optimistic even with fuel at $100 per barrel or well north of $100 per barrel. We're not a big airline so we can react." In addition to its new destinations out of Cleveland, Fort Lauderdale-based Gulfstream now operates scheduled services to nine cities Florida and 10 in the Bahamas. It also operates two daily charter flights between Florida and Cuba.

Gulfstream recently sold off its fleet of eight Embraer EMB-120 Brasilia tuboprops, leaving it with 27 1900Ds. The last Brasilia was removed from service a few weeks ago.

Hackett says there are plenty of opportunities for expansion for Gulfstream compared with a few years ago because it will soon be one of only two carriers in the US operating 19-seat aircraft.

When Colgan Air retires its last 1900D later this year, Gulfstream and Wyoming-based 1900D operator Great Lakes Aviation will be the only two carriers in the US with 19-seat aircraft. Hackett claims in 2000 there were eight 19-seat operators.

Earlier this year three 19-seat operators--Mesaba subsidiary Big Sky, Mesa Air Group subsidiary Air Midwest and Midwest Express subsidiary Skyway Airlines-- all shut down.

"There are a smaller and smaller number of players in that field but it's a growing field," Hackett says. "Our sandbox is growing but there's fewer people playing in the sandbox."

Hackett acknowledges Gulfstream has had "a difficult year" and a combination of high fuel prices and reduced demand forced the carrier to significantly cut capacity in August, phase out its Brasilias and drop several marginal routes. But he adds the remaining network is strong and there are plenty of new opportunities for expansion.

He says Gulfstream is now trying to focus on routes no other carrier currently operates, but produce high volume leisure traffic or strong business demand. Gulfstream now faces no competition on 60% to 70% of its routes, says chief executive Hackett.

"A majority of the routes we operate in our monopolies," Hackett says.

He adds many of these monopoly routes are to small islands in the Bahamas which cannot be accessed by larger aircraft. Demand in those markets continues to be robust since their local economies remain strong and there are no alternative modes of transportation.

"We haven't seen a substantial softening of these niche markets," says Hackett.

For those routes where it has competition such as Miami-Tampa Hackett explains Gulfstream's strategy is to "fill in the gap" by operating during off peak hours while larger carriers offer mainly peak hour frequencies.

In addition to Continental, Gulfstream also codeshares with Northwest Airlines and United Airlines. Unlike other regional carriers, Gulfstream operates in its own livery, sets its own fares and makes its own capacity decisions. On some flights it has multiple codeshare partners.