=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SF Gate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2003/08= /10/TR248592.DTL ---------------------------------------------------------------------- Sunday, August 10, 2003 (SF Chronicle) No-frills, low-cost airlines are fast gaining ground/'Regular' airlines get= ting more like discounters Jane Engle, Los Angeles Times Low-fare airlines and the majors are flying so close together that someo= ne should file a near-miss report. The line between no-frills and full service is quickly blurring. Consider these changes: -- This fall, JetBlue passengers will get more leg room. The upstart discounter, which provides leather upholstery and a TV screen at every seat, will offer two extra inches. Some American Airlines' coach customers, meanwhile, soon will lose as much as 3 inches of room they gained three years ago. American said it would add seats on some planes to let it offer competitive fares. -- Southwest has offered no free lunch -- or any other hot meal -- for years. Now US Airways has stopped serving free meals in coach on most long flights. Passengers may buy food on board or bring their own. Several other majors are trying similar programs. -- You don't have to fly a discounter to get the claustrophobic, cattle-car experience, as cash-strapped majors cut flights to match demand drained by terrorist attacks, recession, war jitters and the outbreak of SARS. Continental and United, for instance, flew fuller than ever in June. More than 80 percent of their seats were occupied on average, compared with fewer than 75 percent of Southwest's. That's good news for the majors, but not so pleasant for passengers on full or overbooked flights. These changes result from a seismic shift in the airline industry, as the financially struggling majors duke it out with discounters for a dwindling pool of travelers. It's a "major correction" similar to what periodically shakes up the stock market, said Terry Trippler of www.cheapseats.com. Delta Air Lines chief executive Leo Mullin, in a speech last month in Washington, D. C., predicted a "slugfest" between traditional airlines like his and the low- fare carriers. What makes the battle at once bruising for airlines and perfect for penny-pinching passengers is that the Internet makes it so easy to compare fares. Airlines, as a result, are forced to drop fares to the lowest common denominator. To survive, the majors, saddled with costs too high to afford these fares, are reducing flights and on-board service. The lean-operating, low-fare airlines, flush with cash and hope, are "ordering planes as fast as they can build them," Trippler said -- and adding a service perk or two. The two sides of the industry are starting to meld. "It's almost at the point that when you say 'the majors,' you have to include Southwest, JetBlue and ATA," Trippler said. Southwest, for instance, says it's the nation's fourth-largest carrier, based on boardings last year. Phil Roberts, vice president and managing partner of Unisys R2A, an airline consulting company in Hayward, has taken to calling American, Delta, Northwest and their ilk "legacy carriers," referring to their existence before the industry was deregulated in 1978. He also dislikes the terms "low-fare" and "discount" carriers. It's most often the legacy carriers who do the discounting, in his view, to match the low fares of the "discounters." Roberts calls Southwest and similar airlines "low-cost carriers," based on how they run the business. (To further complicate the distinction, Southwest and ATA existed before deregulation, albeit not in their current forms.) Whatever they are called, this diverse collection of low-cost carriers is gaining quickly on the legacy airlines. While the legacy lines reduce flights and delay plane deliveries, Southwest has added about 35 flights since January, and JetBlue boarded 60 percent more passengers in June than it did the previous June. Numbers plucked from U.S. Department of Transportation reports by Hyuk Park, senior Unisys R2A analyst, show the change: Legacy airlines -- including Alaska, American, Continental, Delta, Northwest, United and US Airways -- lost more than 15 million passengers overall in two years, as measured by boardings in the United States (except Alaska) in the first quarter compared with the first quarter of 2001. The main low-cost carriers -- America West, Air Tran, ATA, Frontier, JetBlue, Southwest and Spirit -- held their own. Legacy carriers handled about 63 percent of the nation's passengers in t= he first quarter and the low-cost carriers about 26 percent, with regional carriers boarding the balance. The low-cost airlines' ascent is even more dramatic in California, where Southwest has long been strong, and JetBlue has blossomed from its Long Beach base. Such carriers boarded 42 percent of customers at the state's top 10 airports in the first quarter, up from 35 percent in 2001, Park said. Passengers stand to gain from this development despite the pain of lost pampering. "Eventually the whole industry will operate on a low-cost basis," Roberts said, making it possible to blend bargain fares with reasonable levels of service.=20 ---------------------------------------------------------------------- Copyright 2003 SF Chronicle