Charter-airline startup inching closer to liftoff after five years

July 6, 2016

It took several years, but Carmel-based Legacy Travel Club Inc. recently achieved a milestone on its way to full operations.

Last month, Legacy conducted its first flight: a day trip to Mackinac Island, Michigan. Company founder and President Chris Allen said the "flawless" June 21 flight was a sellout, filling all 168 seats.

AllenChris Allen

That represented a significant achievement for the company, which incorporated five years ago and has struggled to raise money for a full-fledged liftoff.

“We were able to prove that our concept works,” Allen said.

Legacy is meant to emulate American Trans Air, or ATA Airlines, an Indianapolis-based carrier that went out of business in 2008. ATA started in the 1970s as Ambassadair, a membership-based travel club.

The Legacy concept: Get people to purchase annual memberships. After becoming members, travelers could purchase individual flights, which would run nonstop between Indianapolis and selected destinations in vacation hotspots such as Florida, Mexico, the Caribbean and Canada.

Legacy has scheduled an Aug. 11 launch party at the Columbia Club in downtown Indianapolis. Plans for additional trips will be disclosed at that time.

So far, Legacy has more than 500 members. The current price for annual memberships is $199 for a family, or $149 for individuals. After the first year, renewal rates are $99.

Allen's goal is to have 9,000 members and offer 295 trips a year. Some of those flights would be seasonal “snowbird shuttles” to five Florida cities: West Palm Beach, Fort Lauderdale and Melbourne on the eastern coast, and St. Petersburg and Fort Myers on the western coast.

The other flights would mostly be overnight trips to vacation destinations, with a few day trips included in the mix.

Legacy’s selling points are nonstop service, roomier seating and free extras such as in-flight meals and Wi-Fi.

And these extras would come with a price comparable to what passengers could find for themselves booking online with a major carrier, said Sandy Allen, Chris' wife and a legacy co-founder.

“We’re not in it for the markup. We’re in it to bring back the direct flights from Indianapolis,” she said.

The Allens have encountered roadblocks along the way.

Chris Allen incorporated Legacy in 2011. About three years ago, he gave up his day job at IUPUI. The couple now devote themselves to Legacy full time.

Allen is a former ATA mailroom employee and pilot's son, but he had no experience launching a startup.

“I had to figure this out as I went along, step by step,” he said.

Early on, Allen envisioned Legacy would own and operate its own aircraft.

“We scrapped that idea because it wasn’t economical,” Allen said.

Last month’s flight to Michigan was with Miami-based charter airline Miami Air International. Allen said he’s working to secure a permanent charter partner for future trips.

In 2012, Legacy had hoped to take a “proof of market” trip to St. Thomas, but that trip never happened. Legacy didn’t attempt another flight until last month’s foray to Michigan.

“We wanted to make sure we could definitely do it this time,” Sandy Allen said.

Legacy had planned to launch in Louisville at the same time it launched in Indianapolis. But a planned trip from Louisville to Asheville, North Carolina, last month was canceled due to low ticket sales.

Chris Allen said many Indianapolis passengers remember ATA, making Legacy easier to sell here.

“A lot of that [ATA] nostalgia has been a huge boost for us,” he said.

That’s not the case in Louisville.

“In Louisville, it’s harder to sell them on what we’re doing, because they’re not familiar with the concept,” Chris Allen said.

Based on the failure of the Louisville-to-Asheville trip, Allen said, Legacy is shelving its plans to enter Louisville for now.

“At this stage, we are focused on Indianapolis,” Chris Allen said.

Money also has been an issue.

In October 2012, IBJ reported that Allen had reached an agreement with Amvest Financial Group, a Missouri-based investment banking firm. Under that agreement, Amvest sought to raise $5.4 million for Legacy.

However, an IBJ story a year later reported that Amvest had largely struck out, and that Legacy had only secured “over $100,000 in financial commitments.”

In a June 2015 filing with the U.S. Securities and Exchange Commission, Legacy reported that it had sold $100,000 of a $3.5 million offering.

Citing SEC rules, Allen and his legal counsel, Indianapolis attorney Brian Bouggy, declined to disclose details of Legacy’s current plans to raise capital.

In a press release issued June 22, Legacy said it had closed its first round of seed financing, although the release did not mention specific amounts.

“Plans are to hand off the next phase of fundraising to a team of local brokers who will be able to point to the success of Legacy’s sellout of Mackinac as proof that the market is ready and waiting for Legacy’s direct, nonstop trips,” Legacy’s press release said.

Robert Mann, an airline industry analyst based in Port Washington, New York, said fundraising can be a challenge for startup travel wholesalers like Legacy.

People will be reluctant to buy a membership unless they are certain that the operator will fly to destinations of interest, Mann said. But in order to secure those destinations, the operator needs money upfront.

Another challenge, Mann said, is that charter air service is somewhat anachronistic.

He said that it lost popularity after airline deregulation in 1978 and fare deregulation in 1983 cleared the way for commercial airlines to be much more competitive on price.

And Federal Aviation Administration oversight of small operators has tightened, Mann said.

“The guys that used to be in this business and used to provide this sort of transportation … those guys are basically gone,” Mann said.

Mann said most remaining charter air operators focus on a few key markets: pro and college sports teams, military personnel, and flights to and from Cuba.

However, what Legacy is proposing could work in a market like Indianapolis because of its history with ATA, Mann said. The challenge, he said, would be trying to expand into other markets down the road.

“It would require a fair amount of demonstration of success in Indianapolis before it’s likely to be easily replicated elsewhere," he said.

For his part, Chris Allen said he’s pleased with Legacy’s progress so far.

“It did take a while," he said. "This has been an evolving business. We are continuing to shape it and mold it, but we are very happy now with where we’re at."


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