Wednesday, December 08, 2010

Dallas/Fort Worth International Airport serves...Q&A: American's former CEO Carty is having fun building his own airline at Virgin America

10:14 PM CST on Sunday, December 5, 2010
By TERRY MAXON / The Dallas Morning News

Former American Airlines Inc. chairman and chief executive Donald J. Carty was among the many people waiting when the first Virgin America Inc. airplane rolled up Wednesday at Dallas/Fort Worth International Airport.

Donald J. Carty Carty, however, was not scouting the enemy, but welcoming his own.

Carty, who left American and parent AMR Corp . in 2003, is chairman of Virgin America, a low-fare, high-frills carrier that began flying in August 2007. He's also chairman of Toronto-based Porter Airlines Inc. and a board member of Hawaiian Holdings Inc., parent of Hawaiian Airlines Inc.

At American, Carty ran an air carrier that existed long before he arrived, an organization well set in its ways. At Virgin America and Porter, he has been on the ground floor of their creation. At Hawaiian, he has participated in the reinvention of a carrier that remade itself in bankruptcy court.

In an interview at the Virgin America ceremonies, Carty reflected on his new life and how airlines have changed. Here are some of his comments, edited for length.

Why can't the older carriers like American, United Airlines Inc. and Delta Air Lines Inc. embrace the Virgin America practice of providing a lot of frills for all passengers?

It's hard for legacy carriers today. ... Since deregulation, they've been in such a battle to get their costs down so they could be more competitive in the marketplace that they've kind of lost track of the customer a little bit.

For years after deregulation, their primary competition was people who entered the market with very low costs and a very low-service model. As they competed toward those prices, they pulled a lot of their services out of their product as well.

What that's created is an opportunity for people to enter the market with a low-cost but high-service model. The first great example of that was JetBlue [Airways Corp.]. What we're trying to do at Virgin America is have a JetBlue on steroids – more of the same.

It must be great fun for you to help create an airline from nothing, as opposed to dealing with an airline that was already established.
It absolutely is. What you have in a legacy carrier is a lot of legacy. You've got a lot of history – a lot of history in process, procedure, employees' ways of thinking about things, which by the way, they were trained to think that way by their managers. There's a lot of good historical reason. This isn't to point a stick at anybody.

This is an opportunity to start over with a fresh piece of paper and say what is it that really needs to be happening in the airline business to appeal to customers.

How is Hawaiian Airlines like Virgin America?

Hawaiian is like a new airline because they went through, like many of the legacy carriers did, the travails of bankruptcy and all the challenges that come with that. But they're a small enough carrier, and they've always been a very family-oriented kind of company

So to rebuild the Hawaiian culture was quite a bit different than what happens at far bigger, far more complex, far more geographically dispersed carriers.
Tell us about your other carrier.

I'm a chairman of an airline in Toronto called Porter Airlines that is offering service out of downtown Toronto to a number of airports all within two hours of Toronto, and it's doing very well. Very similar service model – a complete focus on customer and product delivery.

With Virgin America, Porter and Hawaiian, you've done the domestic United States, you've done Canada, you've done U.S.-Hawaii. When are you going to start an airline in Latin America or Europe?

I don't know. I'm kind of running out of airline time. I've done a lot of airlines over my time, and I've been involved with Canadian Airlines, TWA, Porter – I've probably been chairman of more airlines than anyone in the history of aviation
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