A new airline is on the verge of taking flight in Bentonville.
University Airlines Inc. will cater to the specific travel needs of university athletic programs and may also become the first low-cost commercial carrier ever formed in Arkansas serving business travelers.
The company has lease orders for 30 planes from French company Airbus Industries, and hopes to have as many as four of the $42 million A320s flying by September.
There also are orders for 96 Prevost H345 tour buses — at a cost of about $425,000 each — the company will use to transport collegiate athletes.
The group is definitely not winging it. The company’s business plan calls for projected net income of $17.3 million by year-end 2008. That doubles to $34.2 million the following year and then by 2011, its projected net income jumps to $75.9 million.
Thirty planes will accommodate University Airlines’ expansion plans over the next five years.
The company is a subsidiary of NCA Sports Group Inc., which also is based in Bentonville.
“We actually selected Northwest Arkansas because of the infancy of the Northwest Arkansas Regional Airport, the growth potential out here and the opportunity to be a hometown airline,” said Kevin Clark, CEO, chairman and president of NCA Sports.
Scott Van Laningham, executive director and CEO of Northwest Arkansas Regional Airport, said he has not seen University Airlines’ business plan, but he is aware of the general concept of Clark introducing a hometown airline.
“It’s an interesting idea,” Van Laningham said. “We’d love to have an operation like that based out of here or anywhere in the region because it’s good for the region and the airport.”
NCA Sports, also is the parent company for University Bus Lines Inc., formed in the wake of the 2001 Oklahoma State University plane crash that killed 10 people, including two members of the basketball team.
Experts from various airlines helped OSU officials set up a safety program, evaluate flights and make recommendations after the crash, which was determined by the National Transportation Safety Board to be caused pilot error after they were distracted by electrical failure.
“After we did that, they sent that report to the NCAA and within about 30 days after that report went out, we had 37 clients that were all NCAA Division I universities,” Clark said.
Each of those clients, which includes almost all of the Big 12 Conference schools, still utilize NCA Sports to put together a policy that determines whether the pilots, the maintenance and the aircraft in general is fit for service. It’s a rigorous inspection that checks everything from the last time any major maintenance was performed to the pilots’ background as far as failure rates in flight simulators.
Airlines and aircrafts that pass the tests are then entered into pool and the 37 universities can only select flights for student athletes from that group.
“That’s the premise that we’ve created University Airlines off of,” Clark said. “But now we are moving from oversight in collegiate aviation to actual operation status.”
To do that, the private company is offering 3,550,000 shares of common stock to local investors at $8.75 per share, which totals out to about $31 million. There are also more than 2 million shares that have been acquired by corporate and institutional investors.
The majority of that offering is not for operating capital, but to meet the Department of Transportation’s reserve requirement of $35 million, which is equal to three months of operating expenses.
The company currently has 28 employees, including more than a dozen in Bentonville. Others are in Dallas, Denver, Miami and San Francisco. University Airlines plans to recruit pilots from other airlines or who may be among the 10,000-plus pilots who recently have been laid off. Each pilot must have at least 5,000 hours of experience in flying A320s or similar commercial aircrafts.
Employees underwent training with the FAA on how to do safety audits and walkthroughs on planes even though many already had the training from their previous careers with other airlines.
University Airlines likely will end up building its own hanger at XNA.
A three-year process is nearing completion this spring for University Airlines to gain a Federal Aviation Regulation 121 certificate, which will give it the same license, rights and privileges of commercial carriers such as American Airlines or Delta Air Lines Inc.
Because the universities pay for the majority of the operating expenses of the aircraft, the company will be able to offer “walk-up” ticket prices of about $300 the day before departure to the company’s initial destinations of Atlanta, Dallas, Chicago or Las Vegas. With most airlines, prices increase the closer to the departure time.
The lower prices could put pressure on the other airlines at XNA.
“Competition is always good for the industry,” Van Laningham said.
Players and coaches won’t be charged individually as those costs will be contracted with the universities.
University Airlines has met with several large companies from Northwest Arkansas in hopes of earning their business on the commercial flights.
“These guys are jumping all over it,” Clark said. “They are saying, ‘sign me up,’ because most of their business happens within a two-week window, so they are left paying two or three times what a ticket normally would cost.”
The commercial flights will be six days per week (with Saturday off) and three times a day during peak travel times, which are 7 a.m., 10 a.m. and 6 p.m.
Of course, the primary focus will continue to be centered around the travel needs of the universities. In fact, the Airbus A320 is a 178-seat plane, but University Airlines will put in only 150 seats on a 35-inch pitch to help accommodate larger-sized athletes.
Since most teams don’t have 150 players, University Airlines is working with the institutions to provide seats for fans that will help subsidize the use of the larger aircrafts.
“Baseball is a perfect example,” Clark said. “If there’s a three-day series out in Arizona, they load their players and coaches up and then fans can buy tickets for airline-type prices. It doesn’t increase the universities’ cost at all, but now they have a fan base that gets to go as well.”
The other major aspect of the company is University Bus Lines, which already has been used by teams from Shiloh Christian, the University of Arkansas, Oklahoma State University and the University of Missouri. The buses, which technically are called coaches, provide safe travel to and from the airport and can even help teams travel longer distances if a local airport is too small (the runways must be at least 5,500-feet long and be improved with grooved concrete) to handle the larger aircrafts.
As far as housing the buses, most will be stationed at Ryder System Inc. truck rental locations and will be spread throughout the company’s footprint depending on business demand.
“We’ve had the opportunity to take delivery of some of the coaches and they are the top-of-the-line tour and conversion buses,” Clark said. “Since we got those ahead of time, we went ahead and put them into service locally, just to keep them busy.”
A new airline is on the verge of taking flight in Bentonville.