SILVER AIRWAYS

TAKING FLIGHT INDEPENDENTLY

Silver Airways

1 | thebossmagazine.com | March 2017

SUCCESS

SILVERAIRWAYS:TAKING FLIGHT,INDEPENDENTLY

Silver Airways has found success in an arena even the major carriers can’t

compete: regional fl ying.

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

“BECOMING INDEPENDENT CHANGED EVERYTHING OVERNIGHT.”-Sami Teittinen, CEO and President of Silver Airways

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Silver knew there were options

in this marketplace that

weren’t being explored.

“This business model was

an opportunity to create

something unique: to allow the

management and ownership

of the airline to capitalize

on a market where major

carriers have withdrawn,” said

Sami Teittinen, the CEO and

President of Silver Airways.

As major airlines learned

what it would take to make a

profi t—and implemented new

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

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.

“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.

SAAB

5 | thebossmagazine.com | March 2017

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.

SUCCESS

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

“ 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.”

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

SUCCESS

only fl y from point A to point

B based on city pairs that the

mainline carrier requires. Silver

Airways is much more than

that: it can do everything and

anything that major airlines

do but with a regional aircraft

type and a more regional focus.

The most rewarding part of

going independent? What the

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

into the Caribbean and the

Southeast U.S.

“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

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.

PAN AM

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Ph: 801.401.9100

www.silverairways.com