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 Holiday season, 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 \----------------------------------------------------------/ Northwest Chief Rules Out Starting a Low-Cost Airline December 4, 2003 By KEN BELSON and MICHELINE MAYNARD TOKYO, Dec. 3 - As traditional airlines obsess over the threat posed by low-cost carriers like Southwest Airlines and JetBlue, the chief executive of Northwest Airlines, Richard H. Anderson, has ruled out starting one. In a rebuttal of Northwest's closest rivals, Mr. Anderson on Wednesday warned that major airlines would cannibalize their existing businesses if they fly discount carriers on similar routes. Though they may pick up customers at cheaper fares, it will be at the peril of business on the mainline air carrier, he said. Mr. Anderson said he would focus instead on lowering the price of tickets at Northwest, the nation's fourth-largest airline, by cutting labor and infrastructure costs. "We believe that we need low costs across our networks and Northwest has no intention of and has never had at one time or another contemplated or started a low-cost carrier," he said in an interview here, where he has come for a meeting of the International Air Transport Association. Further, he said, airlines are creating complications for themselves by trying to apportion landing slots, aircraft, terminal space and the personnel needed to run the new carriers. Government regulations require each airline to have a specific rank of senior managers for separate operations, he said, and duplicating those layers of management will drive up costs at a time when the struggling carriers can ill afford it. "It's very hard to define which part of your existing business you are going to carve out" to make a low-cost carrier, Mr. Anderson said. "Do you apportion the overhead to the mainline airline and just a little to the low-cost airline? What do you do at an airport where you are both operating?" Mr. Anderson's position is in sharp contrast to some of Northwest's rivals. Delta Air Lines, UAL's United Airlines and other major carriers have started or have said they are planning to start low-cost alternatives. Delta's low-fare airline, called Song, began flying in the spring, mostly on the Eastern seaboard; United's long-awaited low-fare carrier, Ted, will start next year, mostly in the West . Executives at AMR's American Airlines have also said they are studying whether to start a low-fare operation. Only Continental Airlines, which is lined with Northwest in a code-sharing plan, has said it would not pursue one, after failing with Continental Lite a few years ago. The rush of start-ups comes as a number of low-cost competitors are expanding throughout the United States. Southwest plans to start service to Philadelphia in February, while JetBlue has ordered a number of new jets. Meanwhile, Atlantic Coast Airlines, which had operated as United Express along the East Coast, has said that it will begin a new airline, Independence Air, at Dulles International Airport near Washington next year. Though business travelers have benefited from the growth of low-cost carriers, Kevin Mitchell, the chairman of the Business Travel Coalition, said he liked Mr. Anderson's approach. "He's making a lot of sense," Mr. Mitchell said. "When you throw this low-fare carrier operation out there, you give your labor unions a false hope that this is the silver bullet. It prevents labor and management from getting on with the cost-cutting that needs to be done across the airline." Northwest, which is based in Minneapolis, is "pressing ahead" in its effort to win concessions from labor unions and to cut labor costs by $950 million, Mr. Anderson said, but he declined to elaborate. Northwest's resistance to starting a low-cost carrier does not seem to have harmed its profits. It earned $42 million in the third quarter, after posting a $46 million loss for the period a year earlier. Ken Belson reported from Tokyo for this article and Micheline Maynard reported from Detroit. http://www.nytimes.com/2003/12/04/business/04air.html?ex=1071546652&ei=1&en=2eea70ec169f2a9d --------------------------------- Get Home Delivery of The New York Times Newspaper. Imagine reading The New York Times any time & anywhere you like! 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