"Fare wars land at Maine airport with discount carrier"

Thursday, June 24, 2004

Fare wars land at jetport with discount carrier 
By MATT WICKENHEISER
The Portland (ME) Press Herald

 
A welcome addition at the jetport, Independence Air has Portland
officials pushing for a major expansion of the airport to accommodate
existing carriers and possibly other low-cost airlines.  

On Wednesday, William Phillips stepped off Independence Air's second
flight ever to Portland and proclaimed the travel experience "shockingly
nice."

The Baltimore resident said he'd been charmed by little touches like the
recorded celebrities who provide in-flight safety instructions -
comedian Dennis Miller gave the requisite directions, then riffed on the
need to explain seat belts to passengers - and described as "next to
free" the price of his trip.

"Hopefully they can keep it up," he said.

Independence Air, a week-old discount airline, made its first flights to
the Portland International Jetport on Wednesday. With its arrival, Maine
air transportation has been swept into the discount-airline network that
is driving down fares and changing the way people fly nationwide.

Though Independence Air is the first discount airline to schedule
flights to southern Maine in many years, city officials expect more to
follow in the near future. They're pushing for a major expansion of the
jetport to accommodate existing carriers, discounter JetBlue Airways and
possibly other low-cost airlines.

The discounters' entry into markets drives down fares immediately, not
only because the discounters offer low prices, but also because legacy
carriers, such as Delta, Continental and US Airways, have lowered prices
to stay competitive.

US Airways, for example, recently announced that it has begun cutting
fares on flights from Portland to Washington, D.C., in response to the
arrival of low-price competitors such as Independence Air.

The main difference between discounters and the legacy carriers comes
down to labor costs, said Steve Hewins, president of Hewins/Carlson
Wagonlit Travel in Portland.

"The airlines are saddled with high union labor (costs), and the new
entrants basically have no unions," said Hewins. "Generally speaking,
they're flying brand new planes that are designed specifically for what
they're doing."

An airline like Northwest has six or seven types of airplanes, said
Hewins, and needs flight crews with different kinds of training to
operate each type, which adds to costs.

Portland's transportation director, Jeff Monroe, said discounters like
Southwest Air first competed with legacy carriers in the major travel
arteries, and the legacy carriers countered by pushing into regional
markets like Portland with smaller express lines. Now, Independence Air
- itself a former feeder for two airlines - is taking on the legacy
carriers in those markets.

Independence Air is "coming out of the gate with a different business
model, a different philosophy, different types of agreements with their
contract labor," said Monroe. "I think they're very intent on minimizing
their overhead."

On a practical basis, the difference between the legacy carriers and the
low-fare carriers often comes down to reach, said David Swierenga,
president of Virginia-based AeroEcon, a consulting firm that specializes
in the airline industry.

A legacy airline "offers services to many, many points, a vast network
which normally can't be duplicated in point to point," said Swierenga.

The legacies also operate frequent flier programs, whereas the
discounters usually don't, he said.

As far as amenities, there's not a lot of difference between the
legacies and the discounters, with respect to short, regional trips. A
flight from Portland to Washington will likely rate only a pack of
pretzels and a soda, no matter what airline you're flying.

Low-fare carriers transport 25 percent of all passengers, Swierenga
said. But because legacy carriers have dropped prices to be competitive,
about 50 percent of passengers are traveling on low fares, either with a
discounter or a legacy carrier, he said.

Swierenga said there is absolutely no difference between the safety of
the low-fare carriers and the legacy carriers. The Federal Aviation
Administration said it regulates all carriers by the same standards.

Independence Air's low prices have already started to draw passengers to
the jetport, including some who would usually travel to Manchester,
N.H., or Boston to catch cheaper flights.

"This is actually my first time at the Portland airport," said Holly
Christensen of Freeport as she prepared to check in for Independence
Air's second flight out of the jetport.

She was traveling to Atlanta to visit her family. Normally, she said,
she'd travel to Boston to take a flight with discounter AirTran,
formerly known as ValueJet.

"It's about the same price and I don't have to drive to Boston and deal
with Boston traffic," she said.

While it was Independence's first day flying out of Portland, she wasn't
concerned, since it had been operating for the past 15 years under
different names.

The carrier operated as Atlantic Coast Airlines, providing short-haul
shuttle service for United and Delta. 

The airline operated in Portland as United Express until several weeks
ago.

To control costs, the carrier is taking reservations only through its
Web site and by telephone. Independence hopes to appeal to travelers who
are unable to meet advance reservation requirements for other carriers'
discount fares.

While most of the airline's service will be handled by 50-seat aircraft,
plans call for the addition of 27 132-seat Airbus A319 jets by early
2006. West Coast flights will begin this fall, with the carrier
eventually offering 700 daily flights to 50 markets.

Fares will range from $69 to $136 each way, depending on how far in
advance the ticket is purchased and how many seats are available. By
comparison, most existing carriers offer a round trip to Dulles for
$189.

Hewins said the airline had a "lousy reputation for service as United
Express."

"Now that they've been reborn as Independence Air, hopefully that
service will be (improved)" he said.

Reaction was mostly positive to Independence on Wednesday. George Bruen
of Bath said he paid $130 for a round-trip ticket to Washington, D.C. He
compared that to the $318 he usually paid for a ticket - and that
included his AARP discount.

"The price is right - how can you beat that?" he said.


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