"Cattle cars replace luxury as air travel devolves"

Saturday, October 30, 2004

Cattle cars replace luxury as air travel devolves 
BY MICHELINE MAYNARD
The New York (NY) Times


CHICAGO - After half a decade of turmoil, a picture of air travel in the
United States is starting to emerge, and it is far different from the caring
image the airlines like to present. 

In an artsy television commercial for United Airlines, for example, a flight
attendant gives an excited traveler water for a rose he is taking home to
Mom, while in American Airlines' advertising landscape, travelers are flying
for happy reunions. After all, the airline declares, "We know why you fly."

In truth, Americans fly now because it is cheap and often the fastest way to
travel, as planes have become not luxury liners but subways of the sky.

Planes, many of them packed, are set to carry more than 600 million
passengers this year, masking the fact that the big airlines are in a
financial free fall, having lost $30 billion since 2000, and are expected to
lose another $5 billion this year and next.

The airline carrying the most passengers within the United States is now
Southwest, according to the Transportation Department, far outstripping its
roots as a regional carrier from Texas. Southwest's growth illustrates why
fares keep dropping, pushing three of the industry's top 10 airlines into
bankruptcy.

The average transcontinental trip, which set travelers back more than $400
each way four years ago, now costs closer to $200, according to Back
Aviation Solutions, an industry consulting firm.

All this has sent the big airlines scrambling to devise strategies that will
keep them in business, a process of creative destruction that is akin to the
chaos that afflicted the telecommunications industry in the 1990s. 

While no one expects airline seats to be sold like minutes in a phone plan -
at least not yet - it is clear that the full-service approach that United
and American would still like customers to think is the norm is fast
vanishing from the scene.

Though the big airlines still pay lip service to the idea of competing with
the low-fare companies, in truth they are casting a desperate eye on the
last corners of the market where they can still charge top prices for
tickets, namely trans-Atlantic flights, overseas trips and flights across
the country where celebrities, executives and others still want first-class
seats.

A new survey by the Brookings Institution suggests that many customers might
simply not care about the opportunity for luxury. The survey measured each
of the major airlines according to the value that it provided passengers, in
terms of low fares and the number of cities served.

The study found that by far the most value was provided by Southwest,
distantly followed by United and Delta. American, Continental and US
Airways, meanwhile, actually provided negative value. 

That indicated customers felt "getting rid of them would be good" because
their absence would allow better airlines to take up the slack, said
Clifford Winston, a Brookings economist.


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