The Brancatelli File
TWO MORE BRICKS FALL
OUT OF THE FARE WALL
BY JOE BRANCATELLI
February 12, 2004 -- So did you hear those two loud thumps at either end of the continent today?
They were the sounds of two more bricks falling out of the Byzantine fare wall built by the Big Six carriers. They were the sounds of two more nails being driven into the coffins of the Big, Sick Six.
Okay, enough metaphors for one week. Let's get down to the dollars and sense of what can only be described as spectacularly good news for us huddled masses of business travelers.
Within hours of each other today, Alaska Airlines and Southwest Airlines both made huge fare news. The announcement from Seattle-based Alaska Air that it was restructuring its entire fare system, slashing walk-up coach and first-class fares nationwide and dropping the hated Saturday-night stay restriction was largely unexpected and hugely important for the future of domestic business travel. The release of the fares for Southwest Airlines' new Philadelphia service was expected and, as expected, it is another signal that the nation's weakest, most sclerotic and worst-managed Big Six carrier, US Airways, may not be long for its Philadelphia hub or the planet at large.
The Alaska Airlines move is delicious because, like America West's decision early last year, it means another two-class, fairly traditional hub-and-spoke carrier has renounced the onerous Big Six fare structure that has destroyed business travel, depressed leisure travel and generally condemned the Big Six to years of self-inflicted financial hemorrhaging. If Alaska's announcement can be believed--and my own first, quick look at the fares in several markets is reliable--the nation's ninth-largest airline has generally boiled its structure down to six fare types: four advance-purchase (3-, 7, 14- and 21-day) prices, walk-up coach and first class.
The walk-up coach and first-class fares seem to be as much as 60 percent below Big Six prices on comparative routes. Best of all, the Saturday-night stay requirement is gone on the advance-purchase fares. Most now require only a one-night stay, more than manageable for most business trips. And even if you must buy Alaska's unrestricted walk-up fares, they are surprisingly reasonably priced.
Two examples: Alaska's new one-way, walk-up coach fare on its Seattle-Newark route is now just $429.10 for a flight leaving tomorrow (February 13). Its first-class fare is now an eminently reasonable $529.10. By comparison, Newark-based Continental Airlines, which is now the most hard-nosed defender of the existing Big Six fare structure, is charging $680.60 for walk-up coach tomorrow. Its cheapest one-way first-class fare for a flight tomorrow: $1,222.60.
You don't need a calculator to figure out that Continental is now charging more than twice what Alaska Air is charging to sit up front.
Meanwhile, Alaska Air launches flights between Seattle and Chicago/O'Hare on April 26. According to the Alaskaair.com Web site, the airline's unrestricted coach fare for a Seattle-O'Hare nonstop on April 27 is now just $399.10 one-way. A first-class seat is selling for $479.10. Let's just hope you can wait until April because here's what United.com says United Airlines is charging for a Seattle-O'Hare flight tomorrow: $619.10 for a nonrefundable one-way coach seat, $1,019.10 for an unrestricted walk-up coach ticket and $1,342.10 for first class.
Or try that Seattle-O'Hare fare comparison this way: Alaska will be charging about $60 less for an unrestricted roundtrip in its first-class cabin than United is charging for an unrestricted one-way coach ride.
How will the Big Six carriers react to Alaska's pricing moves? To be honest, I don't know. I do know that they won't be able to bully Alaska Air as they tried to pummel America West two years ago. Besides, that tactic didn't work: America West held fast despite a brutal fare war launched in its markets and the abrupt cancellation of its code-share with Continental. And it has now reported three consecutive quarterly profits. In my wildest dreams, I'm hoping that the Big Six finally get the message that rational fares eventually unleash both legitimate business-travel demand and new discretionary leisure-travel traffic. I'm hoping that they not only match Alaska Air on the routes they fly, but that they also adopt their own versions of simplified fares nationwide.
But gambling on sanity from the Big Six is usually a bad bet. It's much more likely that they'll throw a hissy fit, try to harass Alaska Airlines and continue to defend their old fare structures as if they were the aeronautic equivalents of Verdun.
Insanity and the mention of Verdun naturally lead us, as they always do, to US Airways and the onslaught it faces from Southwest Airlines. In May, Southwest will launch 14 flights from US Airways' Philadelphia hub to six cities: Orlando, Chicago/Midway, Las Vegas, Phoenix, Tampa and Providence, Rhode Island. The fares Southwest announced today are as low as $29 one-way for 14-day advance purchases.
But the bigger news is Southwest's walk-up fare to Chicago/Midway: just $140 one-way on a fully refundable basis. I surfed over to the USAirways.com Web site and looked at one-way fares between Philadelphia and Chicago/O'Hare tomorrow. For the privilege on sitting on a Boeing 737, exactly the same plane as Southwest flies, US Airways wants $477.10 for a nonrefundable ticket. Its unrestricted walk-up fare is $711.10.
You might need a calculator for that one: US Airways is charging 340 percent more for a nonrefundable one-way fare and 507 percent more for the unrestricted ticket than Southwest.
What do you get for US Airways' ferocious premium? Well, an assigned seat. A shot at an upgrade. And the dubious distinction of flying into O'Hare, which is a lousy place to land if your ultimate destination is downtown Chicago.
In the past, flyers haven't found US Airways' high prices to be worth it. Which is why Southwest was able to drive USAir out of the intra-California and intra-Florida markets even though US Air was the dominant carrier when Southwest arrived. And why Southwest was able to drive US Airways out of Baltimore-Washington even though US Airways was the dominant hub carrier when Southwest arrived. US Airways is unsound financially now and saddled with still another crop of inept and unimaginative executives, so there doesn't seem to be any reason to believe it can defend its high-fare policy in Philadelphia for very long.
I don't know about you, fellow travelers. But I consider it a very good week whenever I hear the sound of two more fare bricks falling out of the wall.
This column originally appeared at JoeSentMe.com.
Copyright © 1993-2004 by Joe Brancatelli. All rights reserved.