NYTimes.com Article: A Nation of Airport Haves and Have-Nots

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A Nation of Airport Haves and Have-Nots

September 26, 2004
 By MICHELINE MAYNARD





Correction Appended

BRADFORD, Pa., has good reason to treasure its air service.
Without it, the 10,000 people who live in the town, which
is nestled in the Allegheny Mountains near Pennsylvania's
border with New York, would face a drive of one hour -
maybe much more during bitter winter weather - to reach
another airport.

The end of air service would spell trouble for workers at
the big Zippo lighter plant, for students at the local
branch of the University of Pittsburgh and for guests at
the sprawling Glendorn resort, where visitors pay as much
as $695 a day so they can fly-fish and skeet-shoot in utter
privacy.

But Bradford relies solely on US Airways flights, operated
by Colgan Air, a regional airline, which continues to serve
the town because it collects federal subsidies under the
Essential Air Service program adopted after the industry
was deregulated in 1978. And now that US Airways is
operating under bankruptcy protection for a second time in
two years and is slicing cities from its schedules,
Bradford's air link to the world is in jeopardy.

Bradford is not alone in that prospect. In Pittsburgh, 125
miles to the southwest, US Airways is dismantling the hub
that let residents fly directly to Frankfurt or reach
dozens of cities across the United States, including
Bradford. By year-end, the airline will offer half the
flights from Pittsburgh that it had there in 1997.

"It's very frustrating: one week we think we have a city,
and the next week, you don't have a city," said Kent
George, the airport's executive director, referring to the
destinations US Airways serves from Pittsburgh.

Martin M. Glesk, executive director of the Bradford Area
Alliance, a business group, says the problem is even worse
for small towns like his. "We're the very tip of the tail,"
he said, "and we're not wagging the dog."

With the industry losing billions of dollars each year, and
half of the major airlines operating under bankruptcy
protection or threatening to seek it, such uncertainty is
becoming the norm. In searching for a business model that
works, airlines are dropping some flights and routes while
picking up others at a hectic pace rarely seen before.
Loyalty to cities they have long served is a thing of the
past, even if those cities are hubs like Pittsburgh, St.
Louis, Dallas, Nashville and Raleigh, N.C. At many of those
airports, the airlines have dropped dozens of flights.

"Scrutiny is being made, at very harsh levels, of what an
airline can afford to do," said Michael Allen, chief
operating officer of Back Aviation Solutions, a consulting
company.

IN places where airlines are flocking to add service -
popular destinations like Florida, for example, or hub
cities they want to protect from low-cost rivals -
passengers are benefiting mightily, often enjoying
rock-bottom fares. But the changes are causing sleepless
nights for airport officials in Bradford and other cities
served by one airline that may pull up stakes at any
moment. In those cities, consumers have no idea whether the
flights they booked in July will still be in the airline's
route system come Thanksgiving.

That is especially true for the nation's weakest airlines,
which are tearing up their old schedules and refocusing on
cities that may generate more business. This month, Delta
Air Lines, which has warned that it may be forced to seek
Chapter 11 bankruptcy protection if it cannot cut costs
significantly, announced that it was dismantling its hub in
Dallas in order to emphasize other hubs in Salt Lake City,
Cincinnati and especially Atlanta, its hometown, where it
is adding 80 daily flights.

That will mean a loss of 2,000 jobs in Dallas, and one less
challenger for American and Southwest, both of which are
based there. But those airlines offered far more service in
Dallas than Delta did, because Delta did not have the
resources to battle them head on. "Obviously, with our
current challenges, both financial and competitive, we're
having to make some aggressive changes on using our
assets," said Doug Blisset, Delta's senior vice president
for network planning.

Analysts say the airlines have little choice but to quickly
abandon routes where their traffic does not justify a
commitment. "In the past, when there was not so much
competition, you could afford to wait things out," said
Darin C. Lee, senior managing director of LECG, an economic
forecasting and consulting firm based in Cambridge, Mass.
But with low-fare airlines cherry-picking the major
carriers' most profitable markets, any delay on dropping
money-losing routes "means you could be in a situation
where you put your whole airline at risk," he said.

No company knows that better than US Airways, which filed
for bankruptcy protection a second time on Sept. 12. It has
taken a chainsaw to its schedules in hopes of carving a
low-fare airline out of its voluminous East Coast route
system. Much of that cutting has been done in Pittsburgh.

Seven years ago, US Airways had more than 500 flights a day
at Pittsburgh International - 89.9 percent of all
commercial service at the airport. By the end of this year,
the airline will have just 228 daily flights there, Mr.
Allen estimated.

The airport, built to accommodate US Airways' once-vast
ambitions, is becoming emptier by the day. Juan Avila, 39,
of Pittsburgh, said his family could no longer fly on US
Airways to Kansas City, Mo., his wife's hometown, because
the airline had stopped flying there.

Ticket prices, meanwhile, are spiking for some destinations
and dropping for others as US Airways shifts its emphasis.
Mr. Avila, a manager at Sanofi-Aventis, the pharmaceutical
company, says a round-trip ticket to Baltimore costs him
$700. But if he flew to Philadelphia, an hour's drive from
Baltimore, the cost would be just $200. Prices for that
route tumbled when Southwest, which also serves Baltimore,
began service to Philadelphia in May. "This is ridiculous,"
he said.

James Huscher, 38, of Hartford, says he has to travel on US
Airways because it is the only carrier serving the small
cities he visits as a pharmaceutical sales representative.
But in the past year, Mr. Huscher said, he has repeatedly
encountered canceled flights. The airline blames a shortage
of crew members for the problem, but Mr. Huscher said he
suspects that the flights were dropped because there were
just too many empty seats on them.

He said he missed being home for Valentine's Day this year
because US Airways canceled two flights from Buffalo to
Hartford. The closest the airline could send him was
Newark, more than 100 miles away. So, despite his bank of
frequent-flier miles - 200,000 and counting - he is now
likely to drive more. "You have flexibility that way," he
said.

Soon, that could be the only choice for him and many other
travelers. Industry analysts, as well as US Airways'
chairman, David G. Bronner, have warned that the airline
could end up liquidating quickly if it cannot reduce its
costs and find new investors. Last week, the airline said
it planned to file a motion in federal bankruptcy court in
Alexandria, Va., asking for emergency cuts in union
members' pay.

Seeking to blunt the effect of US Airways' cutbacks, Mr.
George is courting five low-fare airlines that do not now
serve Pittsburgh, including JetBlue, Frontier and
Southwest. Such a move is not out of the question, said
Gary C. Kelly, Southwest's chief executive. "We have the
good fortune of remaining profitable," he said, in a jab at
competitors, "and we're well prepared to move into
abandoned territory."

But even Southwest has to be careful in choosing new
destinations, and in deciding how many flights to offer,
because it must fill 15 to 25 flights a day to and from any
destination for the route to make money, Mr. Kelly said.
Pittsburgh may qualify, but many of the nearly three dozen
cities at risk of losing service if US Airways goes under,
including Bradford, are too small for Southwest to
consider. Bradford has three US Airways flights - all to
Pittsburgh - each day.

The climb in jet fuel prices this year is hastening
airlines' decisions to leave cities where business has
declined, Mr. Kelly said. "If it was marginal before, and
then fuel prices go up, now we can't afford to maintain a
marginal market," hey said.

Even so, expense can take a back seat when an airline
believes it must protect its turf. All this year, for
example, Northwest Airlines has been on a determined push
to dominate cities in the Midwest. It is beefing up service
from Indianapolis next month, and has added flights from
Milwaukee and expanded operations at its hubs in Detroit
and Minneapolis. Last week, Gov. Tim Pawlenty of Minnesota
endorsed Northwest's plan to take over the main terminal at
the Minneapolis airport, pushing competitors to a smaller
building used primarily by charter airlines.

Likewise, Delta is emphasizing Atlanta, building it into a
superhub and spreading out its flights during the day so
the airport is not jammed at certain times. The move comes
as AirTran, a low-fare carrier, has increased flights in
and out of the city.

These developments lead Dr. Lee, the consultant, to say
that the current environment is actually good for many
travelers, who are finding lower fares and more choices.
"Even though it's been horrible for airlines, horrible for
airline employees and horrible for airline investors, you
have to think that the consumer is the big winner in all of
this," he said.

Others agree that travelers are benefiting - at least those
lucky enough to live in areas that low-cost airlines want
to serve. The number of those areas is growing: low-cost
airlines served 44 states in 2004, up from 14 in 1990, Dr.
Lee said. But low-fare airlines make no pretense of
offering comprehensive service. They focus on nonstop
flights and consistently profitable routes.

As traditional airlines are pushed to compete with their
low-cost rivals, passengers in some cities - the smaller
hubs and thinner spokes of the hub-and-spoke model - may
find fewer flights and higher fares, if they continue to
have service at all. "Smaller cities are the most
vulnerable," said Mr. Allen, the consultant.

Mr. Blisset, the Delta planning executive, said the
hub-and-spoke model that traditional airlines use actually
protects smaller cities because passengers from them can go
through a hub like Atlanta to hundreds of other
destinations.

If Delta served only people who wanted to travel the 230
miles from Savannah, Ga., to Atlanta, for example, the
service from Savannah would be minimal, he said. "There is
no way we could support 12 or 13 flights a day there if we
did not have a hub in Atlanta," he said.

CLEARLY, the business has changed from the one portrayed in
old movies like "Casablanca," in which customers at a
crowded Moroccan cafe glance up as the afternoon flight to
Lisbon roars overhead. "Perhaps tomorrow, we'll be on that
plane," a hopeful young refugee says wistfully.

Back then, passengers may have been able to count on
airlines to fly the same routes on the same schedule, day
after day. But in the ruthless new airline industry, where
no carrier is resoundingly healthy, such certainty has
vanished.

"I tell my board that there are no guarantees, because the
whole industry is in such turmoil now," said Mr. Glesk, the
development official in Bradford. "I guess our hope and
thought is that if US Airways does go under, there will be
other airlines" willing to serve the community, he said.

Eric Dash contributed reporting from Pittsburgh for this
article.

Because of an editing error, a front-page article in Sunday
Business today about the possibility of diminished air
service to some cities misattributes an estimate of the
flights US Airways will have each day at Pittsburgh
International Airport by year-end. The estimate - half the
number of flights scheduled in 1997 - is by Michael Allen,
an industry consultant, not Kent George, the airport's
executive director.

http://www.nytimes.com/2004/09/26/business/yourmoney/26plane.html?ex=1097213970&ei=1&en=dc6f58c087cea574


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