Rob McKinney, CEO of FLOAT Alaska
On Thursday, February 10th, I had the privilege to interview Rob McKinney. Mr. McKinney is the Chief Executive Officer of FLOAT Alaska LLC and its subsidiaries—Northern Pacific Airways and Ravn Alaska. He has over 30 years of experience in the aviation industry working at Pacific Wings, Mokulele Airlines, SeaPort Airlines, and FLOAT (Fly Over All Traffic) Shuttle. This interview has been edited for length and clarity.
Joshua Kupietzky: How did you start your career in the aviation industry?
Rob McKinney: I learned to fly when I was 16 and then went to school at Purdue in aviation. And then I exclusively was a pilot for probably the first 15 years of my career. Then I went back to business school, got my MBA, and then kind of transitioned and did both flying and management, up until this job which is the first time that I actually haven't been a qualified line pilot.
JK: What is the ethos behind Northern Pacific and what segment of travelers will you be targeting: VFR, leisure, or business?
RM: It will definitely be a mixture. It will probably skew 60-40 leisure to business. We're definitely targeting small- to medium-size companies for business travel, because we're gonna be in the LCC [low cost carrier] space. The ethos is pretty much just to build on the success that Icelandair has done for the past three decades and replicate what they have done so well on the other side of the world.
JK: Why did you choose the 757 instead of an airplane like the 767 that has more range? And are you talking about going with either the A321 XLR or 737-MAX 9 for the future? As of now, which plane are you most likely going to order and when can we expect them to enter Northern Pacific's fleet?
RM: The 757 was really the only one that could fit the bill. The whole business model is built on the narrow body space. As you look around for potential available narrow bodies, they're the ones that can make a 3800 nautical mile stage link. There's not that many of them. And at the time, 757s were available because of COVID and the contraction in the airline industry. You know a lot of them have been parked in long term storage, so between their availability and inexpensiveness relative to their ability to actually conduct the mission was why we landed on that airframe. As far as the future, I'm not leaning any way just yet. It's probably going to come down to availability. I'm actually going to be meeting with Airbus here in Anchorage next week to talk about what potential possibilities there are. Last time I talked to Airbus though they said that I probably would not be able to get an XLR until 2028. And if that's actually the case, then that'll probably make the decision for us. You know, obviously we can't wait to upgrade to new technology for six more years.
JK: Is there a possibility you may get a 767 so you can fly deeper in Asia and into mainland China?
RM: That's a wide body space, that's probably going to be phase three or phase four for the airline before we leave the narrowbody space. I would love to stay on the same platform. Obviously that would help our pilot training situation as it is a similar type rating, but they're just not available. Finding a 767 right now is just almost impossible.I don't foresee that changing in the next couple years, so that probably will limit the choice once again.
JK: You were talking about serving large markets in the United States to Anchorage and then a few other destinations as well. What percent of passengers will be connecting through Anchorage to destinations in Asia vs. flying only to Alaska?
RM: We're predicting it's going to be single digits. We definitely are Alaskans, and we want to make sure this is a benefit for the state and the city, but it's also a small state and asmall city. So realistically, it’s not going to be a big part of the airline, and that's why it's really not going to be as seasonal as some people are fearing. There really is year-round international traffic that transits between Asia and the continental US.
JK: And how do you plan on targeting passengers to make a connection versus maybe spending a little bit more money and flying direct between North America and Asia?
RM: Well, you landed on the key thing—that a lot of people are price sensitive, and if we are able to offer this at a 20% discount over what they will pay flying direct, we think that will get some people's attention in itself. But also, they'll just have to take a look at the total trip time. Being able to clear customs and immigration in Anchorage versus one of these three hour long queues in Los Angeles or New York is going to be a huge advantage for what it is that we offer. Additionally, you know, who's going to mind stretching their legs halfway through a 15 hour long flight? Also, we have the ability for them to do a stopover and spend a couple extra days in Alaska to go see the beauty and activities that are only available here in the state. So many people have on their bucket list seeing Alaska at some point, but they can't really envision spending an entire week of vacation just to come here. But to spend a couple extra days just like people do in Iceland—that's a pretty low threshold. Then the last thing that we think is really going to be the game changer for us is that our cutting-edge loyalty program is based on cryptocurrency called Fly Coin. We believe that people will be drawn to, instead of getting a point or a mile that expires or has very limited utility other than future airline travel, getting actual currency that can then be traded on the exchanges into other forms of cryptocurrency, back into fiat money, and we're working hard with all the local merchants so that it will be available as a direct form of payment.
JK: There has been a lot of talk about your loyalty program and how it will be completely based on cryptocurrency. Can you talk a little bit about your loyalty program?
RM: That's exactly the plan. You won’t get a mile, you will get a Fly Coin based on how long your trip was, and you'll be able to trade it on the exchanges; we're in talks with several cryptocurrency exchanges right now. You'll be able to transfer it into other forms of cryptocurrency if you want, you can leave it as Fly Coin and just hold it. You can use it as a direct form of payment, or you could know—God forbid—trade it back into fiat currency.
JK: How will you combat the constant changes in cryptocurrency in terms of value of the miles/ Fly Coin?
RM: Fly Coin is a utility token. It's not going to be a security, so while we do envision that the value will increase as it becomes more ubiquitous and gets into more people's hands, we will have software algorithms that will then adjust the earning so that it stays flat and the value of the cryptocurrency you get for your flight will always be the same regardless of the actual quantity of Fly Coin that you receive.
JK: With Alaska being such a large cargo hub, are you planning on expanding your business to include cargo in the bellies of your 757, or are you just focusing on passengers?
RM: It's pretty much just passengers, and that's just because of the physics of the situation. The stage links are so long, especially to get to Seoul and to get to Orlando, that all the extra available space in the plane will be pretty much used up for fuel, so there won't be that much of an opportunity to really go after much cargo. We could probably do a little bit, but it'd be really limited.
JK: Is there a plan to shift Northern Pacific’s business model? You are also the CEO of Ravn Alaska, which during the winter has a larger charter business. Would Northern Pacific operate winter snowbird wet leases as they pop up?
RM: Well, we're definitely going to be in the charter business. I have not really fleshed out that part of the business model yet. But once you have airplanes, pilots, and flight attendants, it would be silly not to avail yourself of charters. And you know, we're beginning talks with tour operators, so what we're hoping to do is some of the things that maybe Korean Air or Icelandair has done on a one-off charter basis. We will be able to do those same kind of trips to bring people to see the Northern Lights or to see something specific.
JK: Staff shortages have been a very big challenge for many US carriers. Has the staff shortages and the difficulty of finding quality staff affected Northern Pacific? And what is your strategy for recruiting qualified people to come and work at a startup airline like Northern Pacific Airways instead of working at any other US carrier?
RM: That's a great question. We're actually somewhat fortunate in that we're on the backside of this worldwide pandemic. So many of the airlines contracted and offered people early retirement that they took. But now they've been sitting for a while and a lot of them are ready to start flying again. Now we have not full-on started hiring line pilots yet; we just now started looking for check airman for our training center. But what it looks like so far is that the interest is there, and there will be enough captains for us to get going who have taken early retirement and still have several years left before they're forced to retire when they're 65.
JK: How has the COVID-19 pandemic affected Northern Pacific's business plans with travel restrictions constantly changing?
RM: It's made starting the airline possible. If we would have contemplated trying to do the same business in 2019, I don't think we could have pulled it off. It's because of COVID-19 and the restrictions that we have access to slots and gates and the facilities that would have all been taken up when aviation was at its peak.
JK: When travel does resume to pre-pandemic levels, do you think you will have trouble finding a target audience and might run into the same problems you would have run into in 2019?
RM: No, because we will already be there. Our brand will be known, we will be fully distributed in all the GDS and will have a foothold. We will then be the carrier that was already there. Once you have signatory agreements with an airport, you don't get moved out.
JK: Have you looked at having a joint venture agreement with any of the US legacy carriers, or any of the Asian carriers? And have you been in talks with any alliances to have a codeshare agreement with?
RM: We've had initial talks with Oneworld that's probably pretty far down the road. But we're pretty serious about joining the Value Alliance over in Asia that we believe we will feed passengers, especially from Tokyo and Seoul.
JK: What's your plan for crew bases? Will there be one main crew base in Anchorage or are you planning to have crew bases in destinations in Asia or North America?
RM: As far as flight crew, there they will be able to live in any city that we serve. Especially in the beginning, when we only have five cities in the US. I can't imagine that we will have crew bases in Asia. It's possible, but the way it looks right now, our main maintenance base is going to be at the Ontario Airport in California. So that's where most of the mechanics will be.
JK: How do you view the main changes that have come about in the aviation sector because of the pandemic? For example, a lot of flyers think about change fees. Many airlines in the US have waived them. As a startup carrier do you plan to implement change fees?
RM: We are going to keep an eye out and see what everybody else is doing. Obviously if all change fees are still gone for all the other airlines, then we have to fall in line, and we won't be able to charge fees that nobody else does. But, there's definitely a cost for changing, so my gut is that change fees will probably creep back in at some point. But again, we're gonna mirror the rest of the industry.
JK: How many 757s will be stationed in Ontario versus Anchorage?
RM: All the planes remain overnight at the end of the route. I would think if we're going to have spares, they're going to be more in the maintenance space [Ontario]. Anchorage is just a hub, and especially in the winter I'm not going to be staging airplanes where they're gonna have to be de-iced every day if they're not being used.
JK: Do you plan to focus on more seasonal travel? For instance, during the winter in Alaska, would you add frequencies to Florida and target people that live in Alaska versus the people making the North American trip from North America via Anchorage to Asia?
RM: No, we're not targeting any seasonality. The business is built on international traffic between Asia and the continental US. And seasonality will just be a side effect of more people coming to Alaska in the summer.
JK: We started by talking about your background in the aviation industry. What advice do you have for young people trying to start a career in the aviation industry?
RM: There's never been a better time. I had to be a flight instructor for two years and I hauled canceled bank checks at night for two years, and then I flew FedEx Caravans for a couple years, and it was a struggle. Now it's a fast path, straight to the left seat of a major airline. So my advice is to get in and charge straight ahead. Our plan is that we're going to start working with accredited flight schools and community colleges where, if a student has racked up a significant amount of guaranteed student loan debt and they come to work for Ravn Connect, Ravn Alaska, or Northern Pacific, we will make their loan payments for them for as long as they remain our employees. Conceivably you could become a career aviation professional nearly for free if you take the path of coming to work for us.
