© Elliott Publishing.
Network Airlines: Not Dead Yet
Joel Widzer · June 6, 2004
Open any major newspaper, listen to any financial report, or read any number of Web sites offering travel advice and you'll be sure to hear about the demise of the major network air-carriers. For years, travel pundits have proclaimed that the economy airlines (Southwest, JetBlue, AirTran Airways, Frontier Airlines, and Independence Air) are the Darwinian equivalent of natural selection.
Well, it is time to call a spade a spade.
Even though the low frills mode of transportation has been glamorized in the media as the future of travel - not unlike the way they described dot-coms as the future economy a few years ago - these companies can't deliver the value proposition.
And value is what travelers are really looking for.
You know, the four Cs: cost, convenience, choice, and comfort. Strict adherence to low-cost is not as relevant as affordability and lifestyle choice.
The basic assumption of the economic carriers' business model is that people will accept any level of service as long as it is cheap. That's where the misunderstanding begins.
Economy carriers do not offer the best way to travel, nor do they offer the cheapest. Typically, economy carriers over-promise and under-deliver. Maybe that's why 95 percent of all start-up carriers fail. By far, economic carriers provide nothing more than the simplest service -treating people like a commodity.
In fact, some of the services can be down right demeaning. One major European economy carrier recently announced that future aircraft will not have window shades or seat pockets. Instead, your seat back will be plastered with advertising. What's next, coin-operated toilets?
Despite pedestrian service, economy airlines enjoy a mass influx of converts. Is this tectonic exodus well-deserved - or just a matter of spin?
The truth is, it's spin.
The greatest spin happens when economy carriers are called low-fare airlines.
Referring to them as "low-cost" is duplicitous. Consider a recent sampling of fares for a round trip flight from Washington, D.C. (Dulles) to Oakland, Calif., departing June 8th, returning June 10th. "Low-fare" JetBlue offered a $275 fare, while "high-cost" Delta Air Lines yielded a $219.40 price, which included a chance for an upgrade.
Here's another example. This past week while planning a trip from Los Angeles to Philadelphia, I compared fares on Delta Air Lines and Southwest. Delta offered an upgradeable fare for $304, while Southwest's fare was $408.
And they call Southwest a low-fare airline? Please.
Southwest Airlines and its protégés have chiefly succeeded by cherry-picking routes and city pairs, flying between airports with the lowest landing fees - shifting schedules to match passenger demand, operating one type of aircraft that are cheaper to maintain, and easier to fill. They also have lower distribution cost (selling tickets direct and on the Internet), and a cheap labor force.
All of these variables with the exception of labor cost are easily duplicated. However, they do not always serve the best interest of travel consumers.
By only serving a limited number of markets, economy carriers are selfishly saying that their customer's needs are not important. They serve limited markets to save money.
But the reality is that travelers' needs extend beyond one or two destinations. Fact is, air travelers need access to the world.
Moreover, economy carriers typically operate from secondary airports sometimes up to 30 miles away from the city centers. In contrast, full service carriers offer steady global coverage from major airports with seamless connections, and the ease of transferring to partner airlines within their alliances (Star Alliance, One World, SkyTeam).
Oh, and one other thing. One size of aircraft does not fit all. Airlines that only fly one type of aircraft have a fixed capacity. This makes it difficult for flight schedulers to deal with cancelled or delayed flights. Since all flights carry the same number of people which are usually full, passengers whose flights are canceled due to mechanical reasons, or weather, can't be put on another aircraft - because there is no room.
Having a diverse fleet, allows full-service carriers to increase capacity with a larger plane when a flight is canceled, providing customers with greater convenience and comfort.
Air travel is a complex process at best. By focusing their service through the Internet, limiting the number of customer-contact employees available to serve customers, the so-called "low-fare" carriers are seeking self-interest at their customer's expense.
The Internet alone cannot resolve all ticketing issues. With limited customer contact support, passengers of economy carriers often are forced to navigate the Byzantine world of ticketing rules on their own. Full-service air carriers tend to have a higher ratio of full-service employees which might go unnoticed until there is a weather delay or flight cancellation, than these extra people can really help.
Why should travelers choose full-service carriers? There are a myriad of reasons, including cost, comfort, choice, and convenience. It's the ability to fly anywhere in the world with seamless connections, the choice between luxurious first class, an comfortable business class or an enjoyable economy class, while being politely served.
Competitive fares that are sometimes lower than economy carriers, loyalty programs that are not in danger of going away (despite bankruptcy. United's MileagePlus program remains solid). There are in-flight meals, a choice of drinks, a range of entertainment options including movies, television programs, games and music.
In essence, it's a lifestyle choice.
The big three airlines have been serving customers for 75 years. A formidable feat, considering they have weathered an economic depression, numerous recessions, six wars, political turmoil, and changing consumer preference. Certainly, newbie economic carriers have room to prove themselves.
Until then, I think I'll stick with my first-class flights, boarding priority, flying up front at a coach price and the preferred security lines.
Joel Widzer is author of "The Penny Pincher's Passport to Luxury Travel," a guidebook on traveling in high style at budget-friendly prices.
Network Airlines: Not Dead Yet
Joel Widzer · June 6, 2004
Open any major newspaper, listen to any financial report, or read any number of Web sites offering travel advice and you'll be sure to hear about the demise of the major network air-carriers. For years, travel pundits have proclaimed that the economy airlines (Southwest, JetBlue, AirTran Airways, Frontier Airlines, and Independence Air) are the Darwinian equivalent of natural selection.
Well, it is time to call a spade a spade.
Even though the low frills mode of transportation has been glamorized in the media as the future of travel - not unlike the way they described dot-coms as the future economy a few years ago - these companies can't deliver the value proposition.
And value is what travelers are really looking for.
You know, the four Cs: cost, convenience, choice, and comfort. Strict adherence to low-cost is not as relevant as affordability and lifestyle choice.
The basic assumption of the economic carriers' business model is that people will accept any level of service as long as it is cheap. That's where the misunderstanding begins.
Economy carriers do not offer the best way to travel, nor do they offer the cheapest. Typically, economy carriers over-promise and under-deliver. Maybe that's why 95 percent of all start-up carriers fail. By far, economic carriers provide nothing more than the simplest service -treating people like a commodity.
In fact, some of the services can be down right demeaning. One major European economy carrier recently announced that future aircraft will not have window shades or seat pockets. Instead, your seat back will be plastered with advertising. What's next, coin-operated toilets?
Despite pedestrian service, economy airlines enjoy a mass influx of converts. Is this tectonic exodus well-deserved - or just a matter of spin?
The truth is, it's spin.
The greatest spin happens when economy carriers are called low-fare airlines.
Referring to them as "low-cost" is duplicitous. Consider a recent sampling of fares for a round trip flight from Washington, D.C. (Dulles) to Oakland, Calif., departing June 8th, returning June 10th. "Low-fare" JetBlue offered a $275 fare, while "high-cost" Delta Air Lines yielded a $219.40 price, which included a chance for an upgrade.
Here's another example. This past week while planning a trip from Los Angeles to Philadelphia, I compared fares on Delta Air Lines and Southwest. Delta offered an upgradeable fare for $304, while Southwest's fare was $408.
And they call Southwest a low-fare airline? Please.
Southwest Airlines and its protégés have chiefly succeeded by cherry-picking routes and city pairs, flying between airports with the lowest landing fees - shifting schedules to match passenger demand, operating one type of aircraft that are cheaper to maintain, and easier to fill. They also have lower distribution cost (selling tickets direct and on the Internet), and a cheap labor force.
All of these variables with the exception of labor cost are easily duplicated. However, they do not always serve the best interest of travel consumers.
By only serving a limited number of markets, economy carriers are selfishly saying that their customer's needs are not important. They serve limited markets to save money.
But the reality is that travelers' needs extend beyond one or two destinations. Fact is, air travelers need access to the world.
Moreover, economy carriers typically operate from secondary airports sometimes up to 30 miles away from the city centers. In contrast, full service carriers offer steady global coverage from major airports with seamless connections, and the ease of transferring to partner airlines within their alliances (Star Alliance, One World, SkyTeam).
Oh, and one other thing. One size of aircraft does not fit all. Airlines that only fly one type of aircraft have a fixed capacity. This makes it difficult for flight schedulers to deal with cancelled or delayed flights. Since all flights carry the same number of people which are usually full, passengers whose flights are canceled due to mechanical reasons, or weather, can't be put on another aircraft - because there is no room.
Having a diverse fleet, allows full-service carriers to increase capacity with a larger plane when a flight is canceled, providing customers with greater convenience and comfort.
Air travel is a complex process at best. By focusing their service through the Internet, limiting the number of customer-contact employees available to serve customers, the so-called "low-fare" carriers are seeking self-interest at their customer's expense.
The Internet alone cannot resolve all ticketing issues. With limited customer contact support, passengers of economy carriers often are forced to navigate the Byzantine world of ticketing rules on their own. Full-service air carriers tend to have a higher ratio of full-service employees which might go unnoticed until there is a weather delay or flight cancellation, than these extra people can really help.
Why should travelers choose full-service carriers? There are a myriad of reasons, including cost, comfort, choice, and convenience. It's the ability to fly anywhere in the world with seamless connections, the choice between luxurious first class, an comfortable business class or an enjoyable economy class, while being politely served.
Competitive fares that are sometimes lower than economy carriers, loyalty programs that are not in danger of going away (despite bankruptcy. United's MileagePlus program remains solid). There are in-flight meals, a choice of drinks, a range of entertainment options including movies, television programs, games and music.
In essence, it's a lifestyle choice.
The big three airlines have been serving customers for 75 years. A formidable feat, considering they have weathered an economic depression, numerous recessions, six wars, political turmoil, and changing consumer preference. Certainly, newbie economic carriers have room to prove themselves.
Until then, I think I'll stick with my first-class flights, boarding priority, flying up front at a coach price and the preferred security lines.
Joel Widzer is author of "The Penny Pincher's Passport to Luxury Travel," a guidebook on traveling in high style at budget-friendly prices.
