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 The Brancatelli File

joe HOPE SPRINGS ETERNAL:
THIS YEAR'S CROP OF START-UPS


BY JOE BRANCATELLI

January 13, 2000 -- There may indeed be seven habits of highly effective people, 50 ways to leave your lover and 99 bottles of beer on the wall, but there are drastically fewer methods of breaking the power of the insufferably arrogant airline cartels that dominate the American skies.

Virtually without exception, the 10 major U.S. carriers and the two-headed local monopolies that control Canada and Mexico act and react without passion or imagination or creativity. They fly the same planes in the same configurations, operate the same hub-and-spoke networks, offer up the same unpalatable in-flight services and promulgate the same Babelistic fare structures that inevitably reward their most fickle infrequent travelers and penalize the most loyal frequent customers.

One of the very few ways to challenge this oligarchy of awfulness is with some new airlines. New carriers--complete with new names, new faces, new ideas and new product offerings--are always a shock to the sclerotic system. We might not have any real hope of making the existing airlines serve better, price more fairly or operate more efficiently, but we sure as hell can get their attention if we shift some of our business to a brash new carrier offering a new approach to frequent travel.

Of course, the track record of start-up carriers is not all that good. Of the ten major U.S. carriers now flying, only America West was founded after the 1978 deregulation of the airline industry. (And, ironically, America West is now arguably the worst carrier in the nation.) Perhaps 200 others have come and gone in the last two decades. Last year was particularly hard on airborne upstarts: Kiwi and Eastwind both folded after long struggles and Reno Air was gobbled up by American. Taesa, once the start-up star of the Mexican skies, was grounded after a horrific crash. And of 1999's crop of newcomers, two failed shortly after launch (Access Air and Tahoe Air) and one (The Coast Airlines) disappeared without ever flying.

On the other hand, 1999 was hardly a total loss. At least three new scheduled jet carriers--National, Sun Country and the third incarnation of Pan Am--did launch and seem to be doing well enough. Access Air, which filed for bankruptcy reorganization last November, may fly again in March. WestJet, based in Western Canada, has growing room now that the bloated Air Canada-Canadian International deal is complete. And even the ultra-cautious Midwest Express--flying proof that domestic air travel needn't be an awful experience--actually added a few routes and flights in 1999.

And hope springs eternal. There are new carriers looking to launch this year. All of them bring interesting new approaches to air travel and some of them may even have the cash to execute their dreams. Consider, if you will, the following candidates:

JETBLUE AIRWAYS
It may sound like the world's first porno airline, but JetBlue has enough of the right stuff to be taken quite seriously. It's got a huge stack of start-up capital--up to $130 million, the company says--orders for a fleet of new Airbus A320s, experienced management and a raft of slot exemptions at New York's Kennedy Airport. The airline is scheduled to launch low-fare flights to Fort Lauderdale on February 11 and Buffalo on February 17. JetBlue says its all-coach fleet will feature leather seats with extra legroom and live, at-your-seat television programming.

CRYSTAL AIRWAYS
Crystal claims it is raising even more money than JetBlue and company president Tim Rivers is promising a "corporate boardroom in the sky." Among the amenities on the all-business-class Boeing 757s: 2x2 seating with 42 inches of seat pitch. The enthusiastic Rivers, who has worked at four airlines, says fares will be about 40 percent below existing coach prices. Crystal hopes to launch before summer with flights from Baltimore-Washington to San Diego and San Jose.

ONEIDA AIRLINES
Upstate New York is home to some of America's most important corporations and a thicket of important research and manufacturing facilities (think Kodak, Xerox, General Electric and Corning), yet the region is plagued by sparse airline schedules and incredibly high fares. Oneida hopes to plug the gap with low-fare flights from Syracuse to cities such as Chicago and Pittsburgh as well as service to Florida. The company originally planned to launch on May 1, but now hopes to begin operation toward the end of the year.

CARDINAL AIRLINES
Based at Melbourne, an underutilized airport not far from Orlando, Cardinal will naturally be painting its planes bright red. And it successfully launched an initial public offering last year to raise capital. But plans to begin flying before the end of 1999 never materialized. The company promises service to Baltimore-Washington using MD-80s outfitted with 112 seats in a 2x2 configuration. What's the current timetable? "Late this year at the earliest," one company executive said.

This column originally appeared at biztravel.com.

Copyright 1993-2004 by Joe Brancatelli. All rights reserved.