This article from NYTimes.com has been sent to you by psa188@xxxxxxxxx /-------------------- advertisement -----------------------\ IN AMERICA - now playing in select cities IN AMERICA has audiences across the country moved by its emotional power. This Thanksgiving weekend, share the experience of this extraordinary film with everyone you are thankful to have in your life. Ebert & Roeper give IN AMERICA "Two Thumbs Way Up!" Watch the trailer at: http://www.foxsearchlight.com/inamerica \----------------------------------------------------------/ Competition Keeps Up as Air Travel Returns December 1, 2003 By JOE SHARKEY GETTING from Point A to Point B this holiday season is likely to take more time than usual, and that situation will probably not improve much in 2004, travel industry experts say. Air travel has been depressed in the aftermath of the terrorist attacks on Sept. 11, 2001, leaving airports relatively uncrowded and allowing the most frequent fliers, hard-pressed business travelers, to arrive at the airport an hour or less in advance and still get through security and sip a cup of coffee before boarding. Now, air travel is beginning to recover a bit, and this holiday season is expected to be the busiest since 2000, with the gains likely to continue through next year. In 2004, barring a new terrorist attack or some other disruption, the Travel Industry Association of America predicts domestic spending on leisure and business travel will total $568 billion. That would be the first year-over-year increase since 2000, when travel reached $590 billion. According to the American Express Leisure Travel Index, the number of American travelers who say they expect to spend more than $5,000 on vacations in the next 12 months has nearly doubled over the year, from 6 percent to 11 percent of adults surveyed. The number who say they expect to fly domestically and internationally next year is up 12 percent, American Express said. That would mean more congestion at airport-security checkpoints - where there are fewer federal screeners to keep things moving. In March, the Transportation Security Administration had 55,600 airport security screeners. By October, cost cutting had reduced that work force to 48,279. "Passengers should come early and allow even more time during the holiday season, especially if they're checking bags," said Jason Schechter, a spokesman for United Airlines, a unit of the UAL Corporation. According to OAG, the publisher of airline schedule data, domestic airlines are putting a million more seats in the skies this holiday season than a year earlier. Industry analysts predict that airlines will increase capacity 5 percent to 10 percent in the first quarter of 2004 over the same period a year earlier, while hoping that the move does not trigger widespread fare wars. But even with the extra seats this holiday season, domestic airlines will still be flying 13.5 percent fewer seats than they did from Thanksgiving through New Year's Day in 2000, OAG said. The reduced capacity underscores the trouble faced by the airlines, especially the so-called network carriers - American Airlines, United Airlines, Delta Air Lines, Northwest Airlines, Continental Airlines and US Airways - which are struggling with high fixed costs to compete, often in the same markets, with low-fare carriers with lower operating costs, like Southwest Airlines, JetBlue Airways, AirTran Airways, Frontier Airlines and others. The bottom line, said Michael Boyd, an airline consultant, is that, despite the gains this quarter, "fewer people are flying, and they're paying less for their tickets" than in 2000, the peak year for travel. In 2000, domestic airlines carried 567 million passengers, according to the federal Bureau of Transportation Statistics, compared with 542 million last year. In November, average fares were about 5 percent to 10 percent higher than last year's fire-sale levels. But airlines looking for quick market share are starting fare sales in competitive markets, and the trend is likely to continue, experts say. Meanwhile, air service will decline, as some airlines abandon unprofitable service in small cities, causing a "wrenching change in the way some people fly," Mr. Boyd added. Even some larger cities are under the gun. In Pittsburgh, cutbacks by US Airways, owned by the US Airways Group, are expected to reduce passenger traffic significantly next year. In St. Louis, American Airlines, a unit of the AMR Corporation, recently cut its daily flights in half, to about 200 from about 400. Low-fare airlines have said they might replace some, but not all, the lost traffic at such airports. For some people, flying is not worth the trouble. "I used to get on a plane at a moment's notice," said Larry Josephson, a longtime public radio producer and program host who lives in New York City. "Now it's always a hassle at the airport, and the airlines are all banging you with extra fees: $100 to make a change; $75 extra for an overweight bag. I finally said the hell with it. I just don't fly anymore." The airlines are trying to woo back lost passengers, and one way is to give better seats and service in coach to passengers who pay more for tickets. This year, both Delta and Continental moved aggressively in that direction. With planes now taking off with their cabins more full than at any time since 1970, passengers on cheap fares are especially likely to be stuck in the dreaded middle seat. "The question we keep asking is: Are we truly recognizing the customer that's providing us with the most revenue?" said Robert Borden, the director for Delta's SkyMiles program. Competitors at low-fare airlines - which have increased their share of the domestic market to 28 percent from 10 percent in the early 1990's - scoff that when the major carriers slight the legions of cheap-ticket fliers, they are driving more customers their way. But Gordon M. Bethune, Continental's chief executive, argued that it was more important to retain loyal customers than to appeal exclusively to the bargain hunters, whom he described as "people who don't know us and bought their tickets on Priceline or one of those other outlets, and who don't care who they're flying as long as they're flying whoever is cheapest." The loyal customers, over time, will fly a variety of fares from the cheapest to the top-priced when they must make a last-minute ticket purchase. But some discount airlines have leapt on the opportunity to give bargain-hunters a higher level of service. One is JetBlue Airways, which began operations three years ago and is now the second-largest carrier at Kennedy International Airport. JetBlue accounts for 20 percent of traffic on the highly profitable routes between New York and Los Angeles and New York and San Francisco, its chief executive, David Neeleman, said. As passengers on major airlines griped about cattle-car conditions, JetBlue increased its fleet's seat pitch to provide three inches to four inches more leg room than competitors, and service is emphasized to flight crews. ONE way the airlines are coping with reduced travel is to emphasize their most profitable routes and services. The walk-up fares for roundtrip business class between New York and London, for example, average about $7,600, and there is far less price resistance at the upscale end of the market than at the low end, although, with all the competition, airlines in November were discounting even those fares. More than a dozen airlines, including several domestic carriers, spent several billion dollars this year to redesign first-class and business-class cabins with such amenities as plush sleeper seats and entertainment systems with on-demand movies and other selections for those sipping Champagne in the front of the planes. Virgin Atlantic Airways, which recently spent $100 million on a plush redesign of its upper class cabins, said recently that it had seen a 10 percent increase in traffic in those seats from August through October, over the comparable period last year. "For the first time in months the early signs are that better times lay ahead," said Sir Richard Branson, the founder and chairman of the Virgin Group, which includes the airline. At those prices? Sure, said Zachary Coffin, an investment adviser in Los Angeles who flew about 250,000 miles a year on business before he opened his own firm and stayed closer to home this year. "People pay it," he said. "If I've suddenly got to be in London 24 hours from now, I'm going to be on an airline that does it right. There's a real psychological thing that comes into play when you start getting into business-class travel. Unless your company is really cheap, if you're at a certain place in the corporate world, you're able to say, 'I sacrifice enough in my life in the road; I'm only going to fly business class. If it's $7,600, so be it - that's what it costs.' " http://www.nytimes.com/2003/12/01/business/01trav.html?ex=1071294202&ei=1&en=d55786d5f31d7b92 --------------------------------- Get Home Delivery of The New York Times Newspaper. Imagine reading The New York Times any time & anywhere you like! Leisurely catch up on events & expand your horizons. Enjoy now for 50% off Home Delivery! 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