The encyclopedia · Strategy & Leadership · Strategic decision · 2003–2006
Hooters Air flew for three years and cost its owner $40M
Hooters of America bought an airline to be a flying billboard; launched March 2003, scheduled flights ended January 2006 after Katrina-era fuel spikes.
Hooters Air · Hooters of America · 2006-01
What happened
Hooters Air was the idea of Robert Brooks, owner of Hooters of America, who bought charter carrier Pace Airlines in December 2002 to fly as a billboard for the restaurant chain. Launched on 6 March 2003 out of Myrtle Beach, it served 17 destinations with a $129 flat fare, 34-inch seat pitch and Hooters Girls selling merchandise in the cabin.
The airline targeted golfers and leisure flyers, but the economics turned when fuel prices spiked after Hurricanes Katrina and Rita in autumn 2005. On 9 January 2006 all scheduled service was suspended; the final flight, Myrtle Beach to Newark, operated on 17 April 2006.
The venture cost Hooters of America an estimated $40 million. Pace Airlines kept flying charters until September 2009, but the branded airline lasted under three years — a restaurant's brand awareness filled seats briefly and covered none of an airline's costs.
Why it happened
- The brand was the only strategy: a flying billboard assumed recognition would convert to loyalty, at a full airline cost structure.
- Fuel broke the model: post-Katrina and Rita price spikes hit a leisure carrier with thin margins and no hedge.
- One owner's money ran out: the airline lived on Hooters of America's wallet, and $40M was the limit of the appetite.
The lesson
A restaurant brand can sell tickets once; it cannot pay for fuel: Hooters Air cost $40M and closed inside three years when Katrina-era prices hit a thin-margined carrier.
Aftermath
Pace Airlines charters ran until September 2009. Hooters Air remains a standard example of brand-extension ventures that mistake recognition for demand.
Sources
- Wikipedia — Hooters Air (commenced 6 March 2003; owned by Hooters of America, operated by Pace Airlines bought December 2002; 17 destinations; estimated $40M cost to Hooters of America; scheduled service suspended 9 January 2006; ceased 17 April 2006; fuel costs after Hurricanes Katrina and Rita cited; Pace charters until September 2009)
- Simple Flying — The Story Of Short-Lived US Carrier Hooters Air (launched 6 March 2003 by Robert Brooks after buying Pace Airlines December 2002 as a 'flying billboard'; targeted Myrtle Beach golfers; $129 flat fare, 34-inch pitch; fleet of Boeing 737s and a 757; Hooters of America lost $40M; suspended 9 January 2006, ceased 17 April 2006; fuel spikes from Katrina and Rita; Pace charters until September 2009)
spotted an error? The club wants to know.
More like this
Delta built a whole airline to fight JetBlue — then folded it back in
TWA filed for its second bankruptcy and was bought by American Airlines for $742M
ValuJet outsourced maintenance and shipped live oxygen generators as cargo — 110 died
Somewhere, someone solved the problem this company failed at. 2nd Opinion →
Comments · 0
Sign in to join the comments.