San Francisco route off to flying start

April 12, 2014

Indianapolis business travelers pay a premium to shave a few hours and a lot of hassle off their trips to Silicon Valley, and they appear eager to do so.

A new nonstop route between Indianapolis International Airport and San Francisco was about three-quarters sold in January and February, the two slowest months for air travel, said Chris Matney, air service director for Indianapolis International Airport. With leisure travelers entering the mix for spring break in March, the route was 90-percent sold, he said.

“That’s huge,” Matney said.

United Airlines decided last year to add the route after the Indiana Economic Development Corp. agreed to provide a $1.5 million annual backstop. It was the first time IEDC provided a cash incentive to an airline.

IEDC will cover any gap between United’s quarterly revenue and a contract minimum, not to exceed $1.5 million for the year, according to IEDC’s contract with the airline. The dollar amount of the minimum revenue requirement is redacted from the contract document, which is available to the public through IEDC’s “transparency portal.”

“The demand for the service is currently meeting our expectations, although we usually like to have a longer period of time to assess the performance,” said Mary Clark, a spokeswoman for the Chicago-based airline.

The route-specific sales information applies to the two legs combined and was available as a result of the reporting requirement under the agreement, Matney said.

United uses a 120-seat Airbus A319. With only one flight canceled in February, that would translate to about 7,900 round-trip tickets sold since the route debuted Jan. 7 from San Francisco.

Gaining convenient year-round air service to San Francisco was a high priority for the local tech industry.

Exact Target CEO Scott Dorsey wasn’t surprised to hear about the first-quarter performance.

“The times I’ve been on the plane, virtually everything is full,” he said.

Dorsey was involved in negotiations for the route along with Indiana Commerce Secretary Victor Smith. Exact Target, which was recently acquired by San Francisco-based Salesforce.com, already has booked hundreds of flights on the route. He said it’s not an exaggeration to say Exact Target has employees on a flight every day.

Ticket prices are reflecting the demand for business travel. Booking a flight April 8 for a round trip in May, prices ranged from $1,124 for a departure on Tuesday, May 20, to $422 for a departure on Saturday, May 10.

A business traveler willing to make a connection would pay a little over $400 to leave Indianapolis on the same Tuesday.

Jeff Ready Ready

Scale Computing CEO Jeff Ready said he’s seen coach tickets on the nonstop route sell for as much as first-class seats on a connecting route.

But the convenience factor is important.

“It is a big help for getting the money guys and the tech executive horsepower from SFO to Indy,” Ready said via email. “The lack of a direct flight before caused me to have most of my board meetings in the Bay Area … and it made recruiting executive board members very difficult.”

Airport officials and tech executives tried for years to persuade an airline to offer a nonstop flight from Indianapolis to San Francisco. An average of 120 passengers a day headed to San Francisco on connecting flights during the winter months, and the demand grew to 180 passengers a day during the spring and summer months, Matney said.

Even with that underlying demand, Matney said United’s performance is better than he expected.

An early advocate for better air service to Silicon Valley, Cha Cha Search founder and CEO Scott Jones said he hopes the nonstop route will perform well enough for United to add a second flight.

Jones expressed concern last fall that the new route’s schedule wouldn’t help Indianapolis firms that need to lure California-based venture capitalists here for visits. The flight from San Francisco International departs at 1:35 p.m. and arrives in Indy at 8:51 p.m., which allows time to attend a board meeting or visit a company the next day. However, the return flight from Indianapolis is at 8 a.m., so visitors from California have to stay a second night if they want a nonstop flight.

“It will be a giant win if that flight maintains 90-percent-sold status,” Jones said via email.

Matney said he’s concerned that Indianapolis residents with an interest in San Francisco travel will be complacent and assume the nonstop service always will be available. Airlines evaluate their routes every month, and they have to be sustainable year-round, he said.

For the distance that United is flying once a day between Indianapolis and San Francisco, the same plane could be put to use on three other routes—selling three times as many tickets—to Chicago; Washington, D.C.; and Houston, Matney said.

The airport is spending $150,000 on billboards for United. The ads feature the San Francisco skyline and the message “SFO friendly.”

Nonstop air service is like a locally owned restaurant, Matney said. “If you only go once a year, you’re stuck with the Applebee’s of the world.”•


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