SILVER AIRWAYS SUCCESS Silver Airways

TAKING FLIGHT INDEPENDENTLY SILVER AIRWAYS SUCCESS Silver Airways

1 | thebossmagazine.com | March 2017 SILVER AIRWAYS: TAKING FLIGHT, INDEPENDENTLY Silver Airways has found success in an arena even the major carriers can’t compete: regional ﬂ ying. SUCCESS “BECOMING INDEPENDENT CHANGED EVERYTHING OVERNIGHT.” -Sami Teittinen, CEO and President of Silver Airways

Over the last 10 to 15 years, hundreds of smaller regional airports have lost commercial air trafﬁ c. This is, in part, due to the tragic events of September 11th. But an unrelated realization is what actually drove major airlines to stop ﬂ ying to these regional hubs.

In short, the money wasn’t there.

It’s an unfortunate fact of the industry: smaller hubs cannot support the larger aircraft on which major airlines tend to make a proﬁ t.

After deregulation, most U.S. airlines weren’t making a consistent proﬁ t. This changed in the last decade: major players began identifying where exactly they were losing money. Small airports were just not part of a sustainable growth model for proﬁ t.

But what didn’t work for major airlines was the opportunity Silver Airways needed.

Silver Airways, owned by Versa Capital Management, LLC, was founded as a regional carrier under United Airlines— as nearly all regional airlines begin. But the leaders within Silver knew there were options in this marketplace that FULL-SERVICE GROUND HANDLING THAT WILL weren’t being explored. GO ABOVE & BEYOND YOUR EXPECTATIONS [email protected] • globalaviationservice.com “This business model was an opportunity to create something unique: to allow the management and ownership PASSENGER SERVICES of the airline to capitalize on a market where major carriers have withdrawn,” said Sami Teittinen, the CEO and CABIN CLEANING & President of Silver Airways. AIRCRAFT DETAILING

As major airlines learned what it would take to make a profi t—and implemented new RAMP HANDLING strategies to do so—regional airlines under major carriers were still stuck in a rut. Only able to make a fi xed margin, local carriers weren’t making SAFETY FOCUSED money either, even as the major airlines began to profi t.

Silver became an independent regional airline in 2013. United Airlines was its ﬁ rst mainline carrier relationship, one that has been integral to the airline’s success. SAAB “The difference now is that United doesn’t mind Silver having multiple relationships,” Teittinen said.

An independent regional airline is a big win for major carriers. Silver Airways providing connecting fl ights, and fi rst and last legs of short-haul trips doesn’t cost big airlines anything. The cities that Silver fl ies to in Florida and the Bahamas wouldn’t be on United’s fl ight map if it weren’t for an airline like Silver. SUCCESS

It obviously benefi ts Silver Airways, too. The airline can continue building its commercial platform: instead of being locked into one carrier and fi xed margins, Silver now has a much better earning potential. Just as importantly, Silver has much better fl exibility in terms of network and fl eet designs and overall strategy.

To facilitate this, however, the business had to grow from around 200 employees to over 700 in a very short amount of time.

Up for consideration before the airline could offi cially launch as an independent: reservation systems, IT infrastructure, gates and other airport facilities, such as ticket counters, maintenance facilities, and hundreds of other components. A website, negotiations for interline ticketing and codeshare agreements with multiple carriers, and signifi cant investments in corporate functions at its corporate offi ce had to be made.

Entire commercial teams, airport customer service and gate agents, airline revenue accounting teams, as well as more pilots, had to be hired.

Silver Airways’ salaries are on par with the major airlines, which is unusual for a regional. This has attracted top talent to the company, and employees are thriving under the ability to be a part of something bigger.

5 | thebossmagazine.com | March 2017 “ IT’S OUR OWN BRAND, OUR OWN AGENTS, OUR OWN GATES IN AIRPORTS, OUR OWN TICKET COUNTERS. WHEN WE WERE AN EXPRESS CARRIER, WE DIDN’T NEED THESE COMPONENTS.”

At major airlines, an IT employee is conﬁ ned to a back ofﬁ ce. At Silver, the head of IT not only runs IT, but also the call center, properties, and is currently in Orlando building a maintenance hangar.

At a large carrier, an MBA accounting employee would fulﬁ ll one position: a revenue accountant role, for example. At Silver, the same person can dabble in ﬁ nancial planning and analysis, and negotiate supply chain agreements.

“It’s our own brand, our own agents, our own gates in airports, our own ticket counters,” shared Teittinen. “When we were an express carrier, we didn’t need these components. Becoming independent changed everything overnight.”

When Silver Airways began ﬂ ying under the independent ﬂ ag, the entire U.S. and all of its smaller regional airports were considered opportunities. The strategy wasn’t as tight as it could have been, and when the commercial pilot shortage hit in 2014, things had to change.

“Regulations shifted. Previously, 250 ﬂ ight hours

March 2017 | thebossmagazine.com | 6 SUCCESS

were enough to become an airline pilot,” Teittinen said. “Today, 1,500 hours are required. The rest period rule changed too. These two factors gravely affected the pilot supply in the industry, as well as their utilization. This made us realize that Silver couldn’t support a fractured, U.S.-wide network of ﬂ ights.”

The company shifted its attention back to its core network of Florida and the Bahamas, and has seen real results with this move. Partnerships with Air Canada and codeshare agreements with JetBlue and Avianca, for example, are allowing more passengers to reach all of destinations throughout Florida, the Bahamas, and Cuba.

“It isn’t surprising that a lot of Canadians want to go to the Bahamas,” he said. “Before our agreement with Air Canada, passengers could only ﬂ y American [Airlines] into Miami—there was no easy connection to Fort Lauderdale to get to the Bahamas.

“Today, Silver is the ﬁ rst choice for Canadians to ﬂ y to the Bahamas on Expedia and other online travel agencies.”

Silver’s partnership with Emirates is coming soon and means that passengers from Dubai can now easily get to the islands as well.

At the end of the day, it’s important to understand what Silver Airways’ mission is. Traditional regional airlines 7 | thebossmagazine.com | March 2017 only ﬂ y from point A to point B based on city pairs that the mainline carrier requires. Silver Airways is much more than WE SOLVE PROBLEMS! that: it can do everything and anything that major airlines WORLD’S LARGEST do but with a regional aircraft INVENTORY OF SAAB 340 type and a more regional focus. SPARES AND TOOLING

The most rewarding part of going independent? What the 9 leaders have built at Silver Airways is highly scalable.

While its core strategy right now is focused on safe, reliable, customer-focused service in Florida, the Bahamas, and Cuba, the company is looking to expand its reach from its core Florida hubs further SALES•EXCHANGES•RENTALS MANAGED INVENTORY PROGRAMS into the Caribbean and the Serving Airlines Worldwide Since 1999 Southeast U.S. www.avinvres.com • +1.817.672.0060 “It’s an evolution,” Teittinen said. “As we invest in bigger and better aircraft, we’ll be able to ﬂ y farther. Currently, our radius is about 300 miles and we’re looking to expand that to 600 in the next 12 to 18 months. For the foreseeable future our focus will be on Florida and PAN AM deeper into the Caribbean.”

Silver Airways will ﬂ y to cities where major carriers aren’t willing and able to ﬂ y with their larger aircraft. Its limited competition in route structure and willingness to provide these services to second tier cities will serve its expansion plans well.

Next time you’re planning your vacation to Florida and the Caribbean, chances are your best deal will be Silver Airways. 1100 Lee Wagener Blvd. Suite 201 Fort Lauderdale, FL 33315 SILVER AIRWAYS Ph: 801.401.9100