Colgan Airways has no first class. Aboard this tiny, two-engine Beech 99 turboprop gliding 8,000 feet above the Blue Ridge Mountains, there are also no snacks, no smokers and no flight attendants.
When two of its passengers, Washington attorneys Mark B. Sandground and John Perazich, arrived at Washington Dulles International Airport to discover their 8:30 a.m. flight to Elkins was canceled due to a scheduling mixup, they called the president of Colgan Airways himself.
"I said, 'Hey Mr. Colgan, I got to get to court,' " said Sandground, who had to be in U.S. District Court in Elkins for a criminal-trial sentencing. "He was terrific, and sent in a plane immediately."
Little-known Colgan Airways Corp. is one of 203 commuter airlines nationwide that take passengers short distances between major airports and smaller towns that the larger carriers frequently bypass. Most of them operate propeller or turboprop planes that carry up to 60 passengers. National Airport is served by 13 of these commuters; three serve Dulles and 11 serve Baltimore-Washington International Airport.
Since deregulation in 1978, when the major carriers were no longer contractually bound to fly unprofitable routes and the government began to subsidize some routes, the growth of the commuter industry has skyrocketed as these airlines moved in to pick up communities discarded by the major carriers.
"Piedmont used to go to Hot Springs, Va., but wanted out," said Charles J. Colgan, president of Colgan Airways. "So the Civil Aeronautics Board awarded the route to us. When Eastern and another airline pulled out of the Allentown, Pa.-Washington route, we also moved in there."
The major airlines have suspended service to 109 cities since 1978 that are now exclusively serviced by commuter airlines, according to the Washington-based Regional Airline Association.
"The commuter industry has dramatically increased in the number of passengers carried, the new equipment fleet and the communities served," said Tulinda Deegan, spokeswoman for the association. "It's been a real boom."
From the "American Eagle" to "Ransome," the commuters carried 26.1 million passengers last year, compared with 11.3 million in 1978, RAA said. The commuter industry's passenger miles climbed from 1.36 billion in 1978 to 4.17 billion last year, and are expected to reach 11.4 billion in 10 years. And the number of airports served by commuters has jumped from 681 in 1978 to 853 last year.
The strong growth in commuter airline travel -- which accounts for 6 percent of total airline travel -- is expected to moderate slightly over the next decade, but it still is expected to exceed the growth rate of the total domestic airline market, RAA predicts. Commuters Link With Majors
Nonetheless, the industry is facing a shake-up as competition heats up. In an effort to secure business that might otherwise be lost to their competitors, the major airlines are scrambling to join forces with commuter lines in new marketing alliances or franchise-like agreements, which in turn is leading to more competition between the commuter firms.
So far, 45 of these "interline agreements," which affect 60 percent of the commuter passengers carried, have been signed.
Today, Colgan Airways, a $6.5 million Manassas-based airline owned by state Sen. Charles J. Colgan (D-Prince William), will ally itself with New York Air to become the "New York Air Connection."
Philadelphia-based Ransome Airlines captured a marketing agreement with Delta Air Lines last year. Ransome, named for its president, J. Dawson Ransome, is now dubbed the "Delta Connection." Piedmont Aviation joined with Salisbury, Md.-based Henson Airlines two years ago. And American Airlines took Lynchburg,Va.-based Air Virginia under its wings in May to create the "American Eagle," which also includes four other commuter lines in other parts of the country.
"Our revenue and passenger load have increased 15 to 20 percent since the agreement with American Airlines," said Curtis M. Coward, president of AVAir Inc., which operates this area's franchise of American Eagle. "It is easier to market our product to a passenger who would not have any knowledge about Air Virginia, but knows American Airlines."
The dramatic shift in the industry has occurred just in the last two years, according to Deegan of RAA.
Some major airlines have more than one of these franchising agreements. Along with its Henson agreement, Winston-Salem, N.C.-based Piedmont Aviation has agreements with four other commuters. United Airlines has marketing alliances with six.
The new alliances increase the commuters' passenger load and allow the major airlines to expand quickly into important outlying markets without buying or merging with the smaller airlines.
"Airline deregulation is a hiccup compared to what we're going through now with these co-sharing agreements," Deegan said. "This is a major revolution in the industry. It's radically changing the way the commuter industry does business."
"It's an avalanche in the industry," agreed Coward of the American Eagle. "It's just proliferating. The economies of operation and the stronger promotion are unassailable."
The majority of these alliances are purely marketing relationships without any financial agreements. The major airline shares its marketing and promotional clout, airport facilities, ticketing, personnel training, travel award programs and computer reservation system with the commuter line, and in return the commuter airline agrees to adjust its scheduling to feed all of its connecting traffic on certain routes to the major carrier.
"It's a marriage of convenience," said Coward of the American Eagle. "The regionals desperately need connecting opportunities, and the majors can't get into these areas cost-effectively with their large equipment."
"We gain identity with a major air carrier, and that gives us a chance to capitalize on their expertise and recognition," Colgan said. "With New York Air joining us, I think we are going to blossom."
In addition to sharing in joint fares to the cities New York Air serves, Colgan also is pleased that his airline will have a strategic advantage over other commuters because it can use a major airline code in the reservation computer, which will give it a better chance of being booked by reservation agents.
Ground traffic for the commuter lines increases overnight by 8 to 10 percent with franchise agreements because of the better computer listings and passenger recognition of the major airlines, an industry source said.
Some passengers, however, have not been pleased when they book a flight on a large carrier's jet, only to find that they have to switch at some point to a 15-seat plane run by an airline they have never heard of. Affiliations Must Be Disclosed
The Department of Transportation recently issued regulations requiring the airlines to disclose their affiliations with commuter lines in their official airline guides. Although Colgan's planes will now be painted with New York Air's colors and logo, Colgan said his airline's name will be next to the planes' doors, at the ticket counter and on ticket jackets.
Some of the new airline alliances have been actual buyouts. For example, Piedmont Airlines now owns 60 percent of Henson Airlines, one of the largest commuter airlines in the area, and plans to buy the entire airline.
"The first year we were with Piedmont our revenues grew about 10 percent," said Richard Henson, president of Henson Airlines, whose airplanes now fly with the Piedmont name and logo on their tails. "The second year, we grew about 20 percent."
Richard Henson, 75, who started a commuter flight from Hagerstown, Md., to Washington in 1962, is considered the pioneer of commuter airlines.
Since deregulation, the commuter industry has moved away from being one where the majority of the airlines are privately held, family-owned operations to one in which a number are now publicly held.
Increased operating costs have been a major factor leading to the growing consolidation within the industry. The number of airlines has decreased from 228 in 1978 to 203 last year. Safety regulations alone, imposed on the industry after deregulation, cost it $11 million between 1978 and 1980.
While the number of airlines has decreased, the number of new aircraft has shot up 67 percent since deregulation, with about 100 new planes entering the fleet each year. The typical commuter airline operates "short-haul flights" of less than an hour and flies at lower altitudes than major carriers.
At some of the smaller commuter lines, the co-pilot is also the baggage handler, flight announcer and ticket-taker. While Colgan Airways doesn't have its pilots carrying suitcases or handling tickets, its president says he is involved in every aspect of the business, including marketing and scheduling.
Commuters generally find it difficult to make a profit because of high operating costs, including expensive equipment and costly insurance. Colgan operates $11 million worth of equipment and pays $30,000 a month for insurance, $100,000 a month for airplane payments and $120,000 a month for payroll.
One key component of deregulation of the airline industry was the guarantee of "essential air service" for 10 years to about 320 small- and medium-sized communities.
A subsidy assistance program was also designed to compensate airlines for losses incurred in providing service to these communities. Colgan said he would lose $36,000 a month on his 13 weekly round trips from Washington to Elkins and five round trips from Pittsburgh to Elkins if they were not partially subsidized.
Commuter flights are not cheap for passengers. Any trip on a commuter is more expensive than a comparable trip on a major airline because the commuters don't have as many seats to sell.
The Washington-Elkins round-trip ticket is $172, while a ticket to a more distant destination, such as Dulles to Miami, costs $49 one way on People Express under a promotional fare, and $99 one way on Eastern.
"Quite frankly, all our commuter fares are high," said Colgan. "We certainly don't claim to be a low-fare airline."