NYTimes.com Article: Experts See Little Immediate Change, but Say Prospects Could Deteriorate as Months Pass

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Experts See Little Immediate Change, but Say Prospects Could Deteriorate as Months Pass

September 13, 2004
 By RIVA D. ATLAS and JOE SHARKEY





Planes will take off on schedule. The service will be
pretty much as you remember it. And your frequent flier
miles are safe.

At least for now.

US Airways' bankruptcy filing yesterday, its second in two
years, has huge implications for the airline industry, but
its customers will probably not notice anything amiss in
the days ahead.

"There will be no direct impact on our ability to
professionally serve you," said Bruce R. Lakefield, the
airline's chief executive, in a letter to customers posted
on the company's Web site.

Analysts pretty much agreed. With the airline struggling to
cut costs, they cautioned that liquidation remained a real
possibility, a move that could create a lot of disruption
for fliers, especially those in the nearly three dozen
cities where US Airways is the sole carrier. Even if that
worst-case situation does not materialize, they said, the
airline could scale back the number of routes it flies.

But for now, they suggested that US Airways fliers relax
but stay vigilant. In the near term, they should probably
be fine, said Joe Brancatelli, publisher of a business
travel Web site called Joesentme.com. "I'd be a little
worried by the first quarter" of next year, he said,
because that is when business for airlines is slowest and
cash is tight.

As a precaution, consumers should not pay for tickets with
cash or checks, Mr. Brancatelli said, and they should
consult their credit card companies to make sure they will
not be charged if the airline stops flying.

What about the issue that is foremost on the minds of the
23 million members of US Airways' frequent flier program?
Again, the advice is: Don't fret.

"No major airline that's gone out of business has ever hung
their frequent fliers out to dry," Mr. Brancatelli said.

But John Frenaye, who owns Carlson Wagonlit Travel in
Arnold, Md., is advising his clients to redeem their US
Airways frequent flier miles as quickly as possible,
although he is still booking flights on the airline. "I
haven't panicked yet," he said. "I think for anyone flying
before February 2005, there's no danger that their flights
will be affected. But after that, I would start to think
about making other plans."

Frequent fliers might be better off cashing in their miles
through one of the airlines that are partners with US
Airways in the international Star Alliance, like United,
Lufthansa or Singapore, some analysts said.

And as the months go by, US Airways is likely to change its
route structures, which could end service for many smaller
cities.

"It would be horrible if they went out of business. But I
think the handwriting is on the wall," said Michael Boyd,
president of the Boyd Group, an Evergreen, Colo., aviation
forecasting and consulting company. "When the dust settled,
what would happen would be a lot of smaller communities -
Ithaca, N.Y., for example - would have no air service or
much less air service."

John Edwards, 61, a Charlotte, N.C., marketing executive,
was at the airport there yesterday, waiting for his brother
to arrive. He lamented the prospect of US Airways'
disappearance. "It'll be devastating to us not only for
employees but, gee, whiz, it's a major hub,'' Mr. Edwards
said. "It would really kill a lot of our business because a
lot of our business is out of town."

Bob Johnson, a spokesman for Ffocus, a group of US Airways
frequent fliers, said his members' real worry was the loss
of a company whose customer-service culture many say is
superior to other airlines'. "If US Airways liquidates and
someone else buys its assets, it could become a Greyhound
bus with wings," he said.

Some US Airways passengers yesterday were taking a
wait-and-see attitude. "I will read up on the problems they
are going to be encountering," said Allan Diefendorf, a
professor at the Indiana University School of Medicine, who
was checking in for a flight at Washington's Ronald Reagan
airport when he heard the news.

Mr. Diefendorf, who frequently flies US Airways, said would
keep flying the airline, unless he had a sense that it was
cutting back "in any significant way on maintenance or
baggage assistance or things that would be considered
security risks.''

Reporting for this article was contributed by Christopher
Elliott, in Orlando, Fla.; Jim Morrill, inCharlotte, N.C.;
andElizabeth Olson, in Washington.



http://www.nytimes.com/2004/09/13/business/13consumer.html?ex=1096102091&ei=1&en=605ae6c6e2e8f1d1


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