Indigo Airlines
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Indigo Airlines is generally regarded as the world's first business jet airline. It was founded in 1997 by aviation veteran and University of Chicago graduate Matt Andersson; business executive and Embry-Riddle Aeronautical University alumnus John N. Fenton and McKinsey consultant and MIT PhD. Tom Svrcek.
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[edit] History
Indigo--or "individuals on the go", for the first time allowed individual travelers the ability to reserve and purchase a single seat on a traditional corporate or business jet which then flew a "scheduled" flight like a traditional airline. Prior to Indigo the only business jet services available to consumers consisted of jet ownership or charter, both expensive options to regular airline travel. Indigo is regarded as the originator of two new categories of corporate jet air travel service: per seat, high frequency and the public or commercial corporate jet.
Indigo priced its service between its first city pair Chicago and New York City close to a so-called unrestricted coach fare. This allowed travelers an affordable travel option while greatly expanding Indigo's addressable market, growth potential and investment thesis. The venture was backed exclusively by the American Express Corporation which owned approximately 12% of Indigo's capital structure. Former American Express CEO Harvey Golub, now Chairman of Sentient Jet, spearheaded and directed the Indigo investment opportunity and exclusive marketing agreement.
Indigo's inventory was marketed and sold through American Express Travel Related Services as well as through the American Express Platinum Card program. Indigo was the first business jet airline to list its seat inventory in major Global Distribution Systems) such as Sabre and Apollo, under the carrier code "I9" which allowed travel agents easy access to Indigo's services. The Indigo project was also supported by management consultants McKinsey & Company and was additionally advised by corporate identity firm Interbrand (an Omnicom company), public accountants and business advisors Arthur Anderson, public relations firm The Dilenschneider Group and investment bank and financial advisory firm Merrill Lynch & Company.
[edit] Fleet
Indigo's initial fleet consisted of four French-built Dassault Falcon jets, regarded as among the finest in the world. The first Dassault Falcon 20 aircraft was originally discovered by aviation pioneer Charles Lindbergh on behalf of Pan American World Airways. The Dassault Falcon was also the original launch aircraft for the Federal Express company, or FedEx.
Indigo's aircraft were fitted with large executive style leather seats, a full hot galley, private bathroom and laptop power outlets. The aircraft were all in similar custom Indigo livery and cabin appointments. Indigo was headquartered in Chicago, Illinois at Chicago Midway International Airport in the former Ameritech corporate hangar facilities. This was a comprehensive, 220,000 square foot co-located hangar, office complex, private passenger terminal and maintenance facility.
Indigo was a fully vertically integrated aviation company and fully owned, employed and controlled its own aircraft fleet, pilots, dispatchers and maintenance services. The company operated as a Federal Aviation Administration FAR 135 commercial operator and additionally was certified by the United States Department of Transportation under parts 41101 and 380 as a public charter operator. Indigo was the first business jet commercial operator to receive an additional DOT fitness approval and was granted a Certificate of Public Convenience and Necessity.
As part of its overall planning and growth objectives, Indigo early in its initial operations distributed a request for proposal to several global aerospace manufacturers for a next generation regional business jet to eventually replace its initial aircraft. Brazilian manufacturer Embraer both embraced Indigo's business model and responded strongly to the RFP in its efforts to introduce its new corporate shuttle aircraft, the "Legacy" jet. The Embraer Legacy was a customized business jet version of the popular Embraer regional airline aircraft. Indigo was the first U.S. certified commercial operator of the Legacy and launched service with this new, environmentally advanced stage 4 aircraft in 2003 in a 16-seat all business-class service. Indigo also solicited the management support of former senior American Airlines executive and American Eagle President Peter Pappas to help guide Indigo's transition to broader regional jet service. Mr. Pappas, while at American, was responsible for the introduction of the Embraer regional jet across the American Eagle division.
[edit] Success
Consumer response to Indigo was strong. The company held a perfect safety record and delivered unusually high on-time and flight completion performance. Its passenger repeat rate was nearly 100% and its revenue per passenger mile or yield, over $1.00. The company was actively followed by major media including The Wall Street Journal, The New York Times, the Financial Times, Fortune, Time, USA Today, CNN, CBS and ABC television and was featured in a 2001 Pulitzer Prize winning article in the Chicago Tribune.
Indigo also became the object of organized lobbying from Congressman Steven Rothman of New Jersey (D-NJ9), who felt that Indigo represented unwelcome expansion at New Jersey's Teterboro Airport. Other parties including Senator Jon Corzine (D-NJ) and Senator Frank Lautenberg (D-NJ) joined in an effort to persuade Department of Transportation Secretary Norman Mineta that Indigo's public charter flights demanded of the Teterboro Airport, part of a group of New York City metro airports operated by the Port Authority of New York and New Jersey, certain security services it was not equipped to provide. Additionally, certain so-called multi-airport proprietor rules were invoked to lend additional weight to opponent's arguments. Congressional lobbying directed to Admiral James Loy, Transportation Security Administration (TSA) Administrator and eventually codified in special interest legislation, was signed by President Bush as part of an FAA Reauthorization Bill. Indigo and American Express management, as well as FAA administration, argued that Indigo's use of Teterboro was appropriate and preferable to local alternatives such as LaGuardia Airport or Newark Liberty International Airport which were designed and configured for large airline aircraft and to prohibit the company from accessing the airport was an unfair discrimination under federal airport funding criteria. Indigo management also argued that the company helped advance the state of general aviation security and pointed to its advanced security procedures that were unique to the industry.
Indigo employed its own security personnel and was the first jet charter company to operate sterile flights between general aviation, non-airline facilities. Indigo customers, employees and vendors cooperated with comprehensive identity, background and screening procedures that were unprecedented in the private jet industry. Indigo submitted to numerous TSA security audits and was fully approved by relevant U.S. Government agencies. Comprehensive general and private aviation security continues to be an unresolved public policy issues.
By 2004, Indigo had voluntarily idled its operations after challenges in securing additional capitalization. The Indigo concept continues to resonate strongly with the traveling public and in 2005 the Netjets company, backed by Warren Buffet's Berkshire Hathaway, announced its intention to begin scheduled business jet service between Chicago, New York and Los Angeles. Other projects mimicking the Indigo business model include Geneva, Switzerland based Club Airways, started by World Economic Forum founders the Schwab family. Other notable ventures borrowing on the Indigo "per seat" inventory, distribution and pricing strategy include the Dayjet company, Linear Air and various jet membership programs offering "shared per seat charter" services. Several new North Atlantic services (sometimes referred to as the "Indigo of the North Atlantic") also have directly applied the Indigo concept of a commercial corporate jet but in larger traditional airline aircraft and include Maxjet, Eos and Silverjet.
[edit] Publications
The original Indigo White Paper was titled "Redesigning the Traditional Airline Model" and published in the Spring 2000 edition of Institutional Investor's Journal of Private Equity. Indigo Founder and former CEO Matt Andersson also reviewed several of Indigo's broader aerospace, consumer and public policy initiatives in his book "The New Airline Code" published in 2005.
