"Fliers unfazed by carriers' woes"

Thursday, September 15, 2005

Fliers unfazed by carriers' woes 
Most travelers at Albany airport to see little impact as Delta, Northwest
airlines file for Chapter 11  
By ERIC ANDERSON
The Albany (NY) Times Union


COLONIE -- It's not clear what impact the Chapter 11 filings by Northwest
and Delta airlines will have on their operations at Albany International
Airport.
 
But airline passengers here and elsewhere have grown accustomed to flying on
carriers in financial trouble, travel agents say.

Both airlines, hobbled by high fuel costs and heavy debt and pension
obligations, filed for bankruptcy protection from creditors Wednesday
afternoon, becoming the third and fourth major carriers to enter Chapter 11
since the 2001 terrorist attacks.

Delta's filing included its low-fare carrier, Song, and was followed shortly
after by Northwest's.

Delta's total debt is roughly $28.3 billion; it listed $21.6 billion in
assets, according to the filing. The asset figure would make Delta's filing
the ninth-largest in U.S. history, according to bankruptcy tracker New
Generation Research Inc. The ranking did not change following Delta's recent
$425 million sale of feeder carrier Atlantic Southeast Airlines to SkyWest
Inc.

Northwest, with nearly $17.92 billion in debt, said it would continue to fly
its normal schedule while reorganizing. Its filing, made in U.S. Bankruptcy
Court for the Southern District of New York, listed $14.35 billion in
assets.

Delta and Northwest said passengers were not expected to see any immediate
effects from the filings. Delta also promised to honor all tickets and sent
a letter to frequent-flier customers seeking to reassure them.

Carl Mitchell, who owns Currier Travel in Colonie, said in an interview
before the filings that his customers haven't changed their preferences
despite the carriers' financial difficulties.

"It's so commonplace now, airlines operating under Chapter 11," he said. "So
we're just in the habit of booking as usual."

"Who else are you going to fly?" asked Jean Gagnon of Plaza Travel in
Latham. She added that people are becoming somewhat blase about airline
reorganizations.

The one thing both Mitchell and Gagnon recommend to passengers is they buy
their tickets with a major credit card, so they're protected, should the
airline stop flying.

"When Eastern went under" in the early 1990s, recalled Gagnon, "people who
paid with a credit card were satisfied, while those who paid by check were
out (the money)."

It's no wonder airline passengers have gotten used to flying on carriers
operating under Chapter 11. Delta and Northwest join US Airways and United
in Chapter 11, and that means six out of 10 passengers at Albany
International Airport are flying on a carrier in reorganization.

Both Delta and Northwest likely will seek to cut money-losing routes, but
it's not clear whether any of these will include Albany.

The biggest impact locally of a Chapter 11 filing likely will be on the
airlines' employees. Wages and benefits might be cut further.

While Northwest's mechanics are on strike, none of them was based here.

Both carriers likely will seek to renegotiate contracts and leases. Delta
pays the Albany County Airport Authority $1.494 million annually in rent,
fees and other charges, while Northwest pays $1.038 million, according to
airport data.

Overall, the airport is expecting to collect $14.879 million from all
airlines for fiscal year 2005.
The industry has been in flux since deregulation in 1978 allowed carriers to
enter new markets and set their own fares without government approval.

Alfred Kahn, at the time chairman of the Civil Aeronautics Board, said
Wednesday that during the first 15 years of deregulation, it looked like the
older carriers "would in fact be likely to take over the whole industry.

"They expanded hub-and-spoke operations; ... it proved to be a very
convenient service, funneling traffic from one leg to another," he said.

But as carriers cut fares to fill seats with leisure travelers while
boosting those of last-minute business travelers, some turned to the
fledgling low-fare carriers, among them Southwest Airlines.

The 9/11 terrorist attacks, extremely high fuel, wage and benefit costs, and
such efficiencies at low-fare carriers as simplified fleets that cut
maintenance costs, all helped give Southwest and others the advantage.

"High fuel prices are the most compelling challenge facing airlines today,"
said Albany International Airport spokesman Doug Myers. "Air travel,
especially here in Albany, is very competitive," with Southwest and another
low-fare carrier, Independence Air, keeping fares down.

Kahn said alliances that some legacy carriers have formed may help them
compete. But he said mergers such as the one planned by US Air and America
West depend on successfully merging the work forces.

Ithaca, where Kahn now lives, may not attract a low-fare carrier. But
Syracuse, 55 miles north, has JetBlue, he said, and regional service from
Northwest and US Air provide a choice of hubs in Philadelphia and Detroit.

Still, Kahn misses the Pittsburgh hub US Air has phased out.

"It was wonderful," he recalled of the early morning flight from Ithaca,
because it allowed him to get "to any place in the United States by noon."


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