U.S. skies may grow crowded with discount airlines = = = = Sunday March 2, 12:05 PM EST = By Jonathan Stempel NEW YORK, March 2 (Reuters) - Airline passengers are on the prowl for goo= d deals, but with a handful of U.S. carriers seeking to enter the discoun= t market, even the cheap seats may prove tough to fill. Unless the discount airlines can find ways to stand out from the crowd, e= xperts predict they might blur together in passengers' minds, and some mi= ght ultimately be doomed. "The effective way to compete strategically is to position yourself diffe= rently," said Roland Rust, a professor at the University of Maryland's bu= siness school in College Park. "When Southwest (Airlines Inc. (LUV)) came along, it cleaned up because i= t had no competition," he said. "The problem is that if everybody (now) d= oes that, you're entering a 'me-too' environment." = Bankrupt UAL Corp.'s (UAL) United Airlines, Delta Air Lines Inc. (DAL) an= d Midwest Express Holdings Inc. (MEH) have unveiled plans to start low-fa= re carriers to compete with rivals that have gobbled up market share. AMR Corp.'s (AMR) American Airlines Inc. also has said it was mulling the= idea. But experts worry that even if more travelers buy cheap tickets, the new = discounters might cannibalize each other's sales or fall short of Southwe= st, JetBlue Airways Inc. (JBLU) and AirTran Holdings Inc. (AAI). Joseph Schwieterman, a professor and transportation expert at DePaul Univ= ersity in Chicago, expects less than 4 percent annual passenger mileage g= rowth through 2010. "Existing discount airlines are already expanding, and that limits the op= portunities for new start-up airlines to quickly carve a niche," he said.= PAYING PEANUTS Delta's low-fare subsidiary, called Song, and United and Midwest Express'= concepts -- as yet unnamed -- face a daunting challenge. The history of large U.S. airlines forming low-fare units is littered wit= h the carcasses of Continental Airlines Inc.'s (CAL) Continental Lite, ba= nkrupt US Airways Group Inc.'s (UAWGQ) MetroJet and United's own Shuttle = by United, which was scrapped after Sept. 11. But with passengers weary of tight security, hub airport bottlenecks, bad= food and skimpy legroom, airlines are recognizing that more travelers no= w insist on paying peanuts -- even if they will not get any once on board= =2E "The customer base is furious (and) trying budget carriers in increasing = numbers because the majors are not delivering price-for-performance on al= most any dimension," said Robert Lamb, a professor at New York University= 's business school and expert on airline strategies. By 2005, more than twice as many American and European travelers -- or ab= out 40 percent of them -- might be flying low-cost carriers, Lamb said. Michael Boyd, an airline consultant in Evergreen, Colorado, said the low-= cost model works best only in big markets where airlines schedule many fl= ights with quick turnarounds. "The low-fare model can't be expanded ad infinitum," Boyd said. "If every= one were like Southwest, 75 percent of the United States wouldn't be serv= ed." An abundance of low-fare carriers and dearth of premium service might als= o turn off business or leisure travelers willing to pay extra for perks. "Airlines are being very foolish," Rust said. "Someone, eventually, is go= ing to have the guts to counterposition against this trend and be the 'hi= gh-service' airline, charging a little bit more." BIG CHALLENGE Analysts have said United could have a tougher time than rivals in launch= ing its low-fare unit, particularly because it will compete on some route= s with United's mainline service. Southwest Chief Executive Jim Parker said Delta's Song might succeed but = would not threaten Southwest, while United's carrier might struggle. "It = is certainly a big challenge to try to manage two cultures within a singl= e company, to manage two sets of customer expectations," he said. Schwieterman, however, was more optimistic about United's plan because of= its broad route network and ability to negotiate lower labor costs throu= gh the bankruptcy process. Low-fare travel does not have to mean bare-bones and still leaves room fo= r experimentation, experts said. Midwest Express, known for serving meals on real china, said its discount= carrier will not do the same but will still offer its signature fresh-ba= ked cookies. Yet cookies alone will not ensure success for the new discount airlines, = NYU's Lamb said. "It can work if the unions and the government effectively allow a two-tie= r strategy, you subsect the market and you choose your shots," Lamb said.= "If everyone goes head-to-head, everyone loses." (Additional reporting by Jon Herskovitz in Dallas) = =A92003 Reuters Limited. = Roger EWROPS