This article from NYTimes.com has been sent to you by psa188@xxxxxxxxx /-------------------- advertisement -----------------------\ Explore more of Starbucks at Starbucks.com. http://www.starbucks.com/default.asp?ci=1015 \----------------------------------------------------------/ For the Airlines, Success Continues to Be Relative May 6, 2003 By JOE SHARKEY LAS VEGAS -- IN the airline business, "where we are all doing everything we can to stay in front of the other guy," any sign of success these days is relative, said Doug Parker, the chief executive of America West Airlines. He underscored his point with a classic joke: "There's two guys in the woods, and a bear comes ambling up. The first guy starts lacing up his tennis shoes, and the second guy says: `What are you doing? You can't outrun the bear!' And the first guy says, `I don't need to outrun the bear. I just need to outrun you.' " That elicited a hearty laugh from about 1,000 corporate travel managers gathered here last week for the annual conference of the Association of Corporate Travel Executives. The fact that anyone was in the mood to laugh, even mordantly, is indicative of several important trends that appear to be developing in the industry as the traditionally slower summer business-travel season approaches. But as Mr. Parker warned, even if there is some positive news ahead, it's all relative. The bear is still going to get his dinner for a while. One trend is that as anxiety over the Iraq war wanes and the fears of severe acute respiratory syndrome, or SARS, subside, air travel seems to be picking up. According to the Air Transport Association, domestic and international travel on domestic airlines rose modestly for the week ended last Sunday, compared with the week before. Traffic to Latin America was especially robust, increasing over 15 percent - its strongest one-week gain of the year. Anecdotally, it's evident that corporate travel has increased, though it is difficult to demonstrate with data since so many business travelers began switching to discount advance-purchase fares usually defined as leisure tickets. "I'm seeing people, business travelers, who I haven't seen in here for six or seven months; my tip totals are higher week by week," Jim Heiser, a bartender at a busy Continental Airlines President's Club lounge at the Newark airport, told me before I left for Las Vegas. There has also been a discernible increase in actual leisure-travel bookings, reflecting the release of pent-up demand, travel agents say. Already the lowest they've been in decades, many leisure fares dropped even further this spring as cash-desperate airlines tried to pump vitality into summer vacation-travel bookings. Even the soon-to-be-retired Concorde, once the provenance of cost-oblivious highfliers, is on summer sale through Aug. 31. On the British Airways' New York-London route, round-trip fares that include a one-way trip on the Concorde (where the standard one-way fare is about $6,000) and a return trip on a regular British Airways flight start at $3,999. The fares require a seven-day advance purchase and are available through next Tuesday. For business travelers, however, an upturn in travel is a mixed blessing. As Mark A. Williams, the president of the corporate travel executives' group, noted here, domestic carriers are now putting 20 percent fewer seats into the skies than they did two years ago. "They cut capacity dramatically," he said. Also, as cost-slashing continues, airlines are using more of the cramped, all-coach-cabin regional jets, which typically have no accommodation for the most treasured frequent-flier perk, the upgrade to first class. On bigger airplanes where frequent business travelers have been luxuriating in the easy availability of first-class upgrades in the travel slump of the last two years, airlines, perhaps tired of giving so many unsold premium seats away, are now engaged in a very unusual fare war over first class. According to Matthew Bennett, the publisher of the Web site Firstclass flyer.com, the first-class fare war was ignited by Air Tran Airways on routes through Atlanta. "America West then came out with these fares systemwide for the U.S. and Canada," he said. "Those fares are now being matched by the other U.S. carriers sporadically. Domestic first class used to be sacred - there used to be no discounting at all." Mr. Williams said that corporate travel managers could expect to encounter "a massive amount of change over the next three years," including upward pressure on all fares as the industry gets firmer control over the supply of seats versus the demand from travelers. Furthermore, travel managers here said, indications are that the major airlines will continue to take advantage of an apparent relaxation in antitrust vigilance and form more alliances that allow them to act together to exercise better control over capacity, routes and prices. Mr. Parker, for example, said he thought that the "government is no longer inclined" to throw antitrust roadblocks up against new alliances or even mergers. Consolidation among major airlines would pose a threat to America West, of course. Last year, America West, which classifies itself as a low-fare carrier, knocked the major airlines for a competitive loop when it revamped its business-fare structure in a move that reduced business fares across the board by 40 to 60 percent. Competitors reacted by scrambling to cut such fares piecemeal on selected routes, but none have matched America West's across-the-board business fare restructuring. "Everybody would admit that the current model is broken," Mr. Williams said of the standard business-fare structure and the major airlines' unwillingness to make the fundamental changes that would sharply reduce, systemwide, the wide disparity between unrestricted business fares and discount leisure fares. Inevitably, in such a revamping, leisure fares would need to rise, perhaps substantially. "I think they've been very slow to recognize that a piece of their business is permanently gone" to the low-fare carriers, he said. http://www.nytimes.com/2003/05/06/business/06ROAD.html?ex=1053227501&ei=1&en=5cf3e1296f363535 HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@xxxxxxxxxxx or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@xxxxxxxxxxxx Copyright 2003 The New York Times Company