Empire Airlines pins its future on shipping freight

COEUR D'ALENE - Empire Airlines Inc. owns just one airplane, but the Coeur d'Alene-based company is no fly-bynight concern.

Empire, which until the mid-1990s carried both passengers and cargo, now operates a successful regional feeder service for Memphis, Tenn-based FeclEx Corp., delivering

"We don't consider ourselves a regional airline," says Tim Komberec, Empire's newly named president. "We consider ourselves a transportation company. We provide service to people, and we just happen to use an airplane to get it done."

It's true that Empire Airlines owns just one plane, but the company operates 112 airplanes - Fokker F27s, Cessna Caravans, and Shorts 360s - that are owned by FedEx and leased to Empire, Komberec says. Empire employs 180 people, about 50 of whom work in the company's Coeur d'Alene headquarters, at 2115 Government Way. Nearly 30 employees work at the company's maintenance base at Spokane International Airport.

Entering Europe

Last year, Empire - a privately held company that had 1999 revenues of about $20 million - expanded operations to Europe through a joint venture with a Basle, Switzerland-based company called Farnair Transport AG. Komberec says that FedEx approached his predecessor, Mel Spelde, who had run Empire for 23 years, and asked him to establish a regional carrier service in Europe.

"Mel Spelde and Empire had a reputation with Fed Ex of getting things done," Komberec says. They said, 'Mel, can you do this for us?"'

Empire accomplished FedEx's request by setting up a Cologne, Germany-based joint venture, called Express Airways. The joint venture has carried cargo between FedEx's Paris hub and other main European airports for about eight months. Spelde, who wanted to slow down his work schedule in anticipation of retirement, decided to take the helm of the new operation personally, which left the top job at Empire Airlines open. Enter Komberec, 51, who started as president of the company in March.

"I'm thoroughly excited about being here," he says. "This is a very well-run company with a tremendous amount of experienced people."

Komberec is no stranger to Empire Airlines or the regional airline carrier business. A former pilot, he has worked in management for a number of regional airlines, including Cascade Airways, Big Sky Airlines, Western Pacific Airlines, and even Empire.

"In 1993, Mel Spelde asked me to come up here as director of operations," Komberec recalls.

Komberec did that job for a year be fore another group approached him about starting up a new regional carrier in Colorado Springs, Colo.

"I'd always wanted to be completely responsible for a new, allturbojet airline, so I went down there (to Colorado) and had a ball," he says.

Komberec had moved on to Kitty Hawk International Airlines, in Michigan, when the top job at Empire became available.

Sticking with freight

Komberec has plans for Empire, but they don't include carrying passengers. Although Empire, which was founded as a charter service in Orofino, Idaho, in 1977, carried passengers from its inception until the mid-1990s, "We have no intention of going back into the passenger business," Komberec says. The competition posed by low-cost Southwest Airlines and Horizon Air, the Pacific Northwest's dominant regional carrier, is too stiff, he says.

"We really like the freight business, and the growth rate is terrific," Komberec says. Empire conducts more than 135 flights a day, and carries about 75 million pounds of cargo each year, including the volume from European operations, he says.

The air-freight business has changed a good deal, even since Empire first started working with FedEx in 1988, he says. For example, FedEx used to move primarily small packages by aircraft. Now, much more of the freight Empire carries is large items, such as materials for manufacturers who follow just-intime inventory practices, he says. The advent of Internet retailing also has been a boon for air-freight carriers, whose flights often provide the shipping method of choice in that immediacy-dependent industry, he says.

In the future, Komberec hopes to find additional air-freight customers to supplement Empire's business with FedEx.

"Our relationship with FedEx is extremely strong," he says, but if FedEx executives for some reason decided not to contract with Empire anymore, "We would be in a world of hurt. We could potentially be out of business overnight."

Adding new customers would increase the Coeur d'Alene carrier's work force, although probably not a great deal at the company's headquarters, he says.

"I think we'll undoubtedly see growth in Spokane in our maintenance operations," Komberec adds. "I think that's going to be an expanding part of our business."

In fact, Empire could become a Spokane-based company at some point, he says.

"We've talked about going across the border to Spokane, and we actually are looking at the different tax structures between the two states," Komberec says. No move will happen soon, however, because the company has three years left on its lease in Coeur d'Alene, he says.