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 The Brancatelli File

joe SEVEN DAYS IN MAY
(AND EIGHT IN JUNE)


BY JOE BRANCATELLI

March 11, 2004 -- Almost two years ago, I wrote a column called Civil War of the Airlines. I sugges-ted that the battle the Big Six was waging against America West, which had recently simplified its fares, and JetBlue Airways, which was growing on routes that scared the existing carriers, would be a turning point in how America's business travelers fly.

We know how that war turned out: America West, JetBlue--and all the airlines that offer a simplified fare structure and affordable walk-up fares--beat the tar out of the Big Six. America West not only survived the unprecedented onslaught launched by the Big Six, but it is also doing something that no Big Six carrier is doing: It is making money. JetBlue, now in its fifth year of flying, has turned the airline industry upside down. The other rational-fare guys--most notably, Southwest, AirTran and Frontier in the United States and WestJet in Canada--are making impressive inroads into the turf of the so-called legacy carriers. Meanwhile, three of the legacy guys--US Airways, United and Air Canada--have sought shelter behind the robes of bankruptcy-court judges.

But that's history. What concerns us today is seven days in May and eight in June. That's when the next civil war of the airlines will be waged. This time, however, the aggressors are the little guys. Taken together, they are preparing an astonishing assault on the remaining strongholds of the Big Six and Air Canada.

You know, of course, about Southwest's full-frontal assault in Philadelphia in May. You may have already heard about the battery of new domestic and Caribbean flights in June that JetBlue announced this week. But just look at this chart of what is coming up from the rational-fare brigade during seven days in May and eight in June.

THE ATTACK OF THE GNATS

MAY 1

WestJet, the major challenger to Air Canada, launches service between Ottawa and Vancouver and increases flights between Vancouver and Saskatoon.

MAY 3

Allegiant Air launches nonstop service between Bismarck, ND, and Las Vegas. Separately, Jetsgo launches additional flights from Air Canada's Toronto hub to three cities: Vancouver, Calgary and Winnipeg.

MAY 4

JetBlue launches nonstop service between Washington/Dulles and Sacramento and between Oakland and Boston/Logan. It also launches additional flights between Dulles and both Long Beach and Oakland.

MAY 6

Allegiant launches nonstop flights between Sioux Falls, SD, and Las Vegas.

MAY 9

Southwest Airlines launches nonstop service from Philadelphia to Chicago/Midway, Las Vegas, Orlando, Phoenix, Tampa and Providence, RI.

MAY 23

Frontier Airlines launches nonstops to Philadelphia from Los Angeles and its Denver hub. It also adds new regional-jet service from Denver to both Billings, MT, and Spokane, WA. It will also increase service from Denver to San Jose, Dallas/Fort Worth and San Francisco.

MAY 27

JetBlue, which already flies from Kennedy to San Juan, launches nonstop flights between its New York/Kennedy home and Aguadilla, Puerto Rico.

JUNE 1

America West bulks up its Las Vegas hub by launching new regional-jet flights to Calgary; Medford, OR; and Fresno and San Luis Obispo, CA.

JUNE 4

America West adds more regional-jet routes from Los Angeles to Edmonton, Canada, and Puerto Vallarta, Mexico. Separately, CanJet launches nonstops from Toronto to both Chicago/Midway and New York/LaGuardia.

JUNE 5

AirTran expands in Boston. It launches new nonstop service to Akron, Ohio, and Newport News, VA.

JUNE 10

JetBlue launches nonstops from its Kennedy hub to San Jose. It also adds its first international service with flights from Kennedy to Santiago, Dominican Republic.

JUNE 11

America West expands in Los Angeles with new regional-jet flights to Vancouver and Mazatlan, Mexico.

JUNE 17

JetBlue begins flying between JFK and Santo Domingo, Dominican Republic.

JUNE 20

Frontier launches new nonstop service from its Denver hub and Nashville.

JUNE 26

WestJet launches flights between Toronto and Victoria and Halifax and Calgary.


What is most striking about this new wave of service is its diversity. It stakes out routes to smaller cities that have been largely ignored by the Big Six. It expands the rational-fare airlines' reach internationally. And much of it goes head-to-head with the Big Six and Air Canada at their supposed "fortress" hubs.

If history is any guide, Southwest's assault on Philadelphia will be a rout. After all, Southwest has already driven US Airways out of the intra-California and intra-Florida markets and it destroyed US Airways' Baltimore-Washington hub. JetBlue has waged ferocious war with American and United airlines on the transcontinental routes, but it has always emerged the victor. Its new transcon flights should do okay, too. And while international service is new for JetBlue, the New York-Dominican Republic routes can support the new flights and JetBlue's simplified offerings.

The other assaults from America West, AirTran and Frontier seem logical and sustainable, too. And the attacks against Air Canada pit three aggressive low-fare carriers against a bloated and arrogant airline that is now routinely loathed in its home country.

Is the attack of the gnats a guaranteed success? Certainly not. When roused, the Big Six has shown a remarkable willingness to bleed themselves and their shareholders white to ward off the smaller carriers. But the Big Six is nervous now, most of them are financially exhausted and all are astonished that their traditional big guns--brutal price wars and massive capacity increases on battleground routes and gimmicky frequent-flyer promotions--no longer inflict substantial damage.

Which leads us back to what is always the consumer's front line in these civil wars between the airlines: the fare structure.

The only thing that binds disparate carriers such as Southwest, Frontier, JetBlue, AirTran and America West into a cohesive front is their simplified fare structures. Otherwise, they are a jumble of service ideas: Southwest and WestJet in Canada remain resolutely no frills, Frontier and JetBlue pursue upgraded all-coach models and AirTran and America West offer two-class in-flight products.

And, in point of absolute fact, the only thing that makes the Big Six a cohesive unit today is its stubborn and internecine adherence to the weird, convoluted, customer-repellent fare structure of the past. Surely, no one can logically compare American and United to each other now. US Airways and Continental, the awful and the best-of-a-bad-lot, may not even be in the same business as each other anymore. All the Big Six has in common is the idiotic fare structure that depresses profitable walk-up business travel and dampens leisure-travel demand.

This war, as all the others before it, is about fares. This war, as all the others before it, is about who prices logically and creates the traffic and who prices insanely and chases away the customers.

This column originally appeared at JoeSentMe.com

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