Stark Reality
ARLINGTON (theHub.com) - Major airlines in the U.S. face a stark reality -- adapt or die. That's the conclusion of several experts interviewed by the Fort Worth Star-Telegram in a comprehensive article today reviewing the troubles of major airlines struggling to compete with low-cost carriers. Stiff competition from the younger, leaner competitors has permanently eroded advantages long enjoyed by the major carriers. No longer do dominance at huge hub airports and complex pricing systems guarantee legions of business travelers who are willing to pay high fares to fly, the newspaper said. Instead, more passengers are gravitating to fast-growing discounters like Southwest Airlines and JetBlue, which have altered the landscape much as Wal-Mart revolutionized the retail industry in the '90s and Japanese automakers shook up the auto business in the 1980s.
Low-cost, low-fare carriers now control about 26 percent of the domestic air travel market, up from 7 percent in 1990, according to the U.S. Department of Transportation. And some experts predict that one day they could move to the top of the pack. "Eventually, the largest carriers [in terms of domestic passenger traffic] in the United States are going to be Southwest and JetBlue, and the large network carriers are very much in danger of turning into niche airlines," said Alan Sbarra, vice president of Unisys R2A Transportation Management Consultants. "That's the reality." As airlines try to adapt, some trends are emerging. Among the possible changes observers listed for the Star-Telegram:
-- Fewer hubs. Airlines will likely scale back some hubs and close others while increasing city-to-city flying, expanding use of RJs and adding lucrative international flights.
-- Simpler fares. Competition from discounters and the growth of online bookings are promoting a simplified approach.
-- Fewer airlines. Some troubled carriers may not survive, easing competition for those that make it.
-- Steeper cost cutting. Big airlines that have already slashed employees' salaries and trimmed staffs may need to do more to shrink the cost advantage of discount airlines. It could mean more concessions.
"To get from here to there is going to be extraordinarily difficult," said Michael E. Levine, a law professor at Yale University who previously worked at Northwest, Continental and New York Air.
ARLINGTON (theHub.com) - Major airlines in the U.S. face a stark reality -- adapt or die. That's the conclusion of several experts interviewed by the Fort Worth Star-Telegram in a comprehensive article today reviewing the troubles of major airlines struggling to compete with low-cost carriers. Stiff competition from the younger, leaner competitors has permanently eroded advantages long enjoyed by the major carriers. No longer do dominance at huge hub airports and complex pricing systems guarantee legions of business travelers who are willing to pay high fares to fly, the newspaper said. Instead, more passengers are gravitating to fast-growing discounters like Southwest Airlines and JetBlue, which have altered the landscape much as Wal-Mart revolutionized the retail industry in the '90s and Japanese automakers shook up the auto business in the 1980s.
Low-cost, low-fare carriers now control about 26 percent of the domestic air travel market, up from 7 percent in 1990, according to the U.S. Department of Transportation. And some experts predict that one day they could move to the top of the pack. "Eventually, the largest carriers [in terms of domestic passenger traffic] in the United States are going to be Southwest and JetBlue, and the large network carriers are very much in danger of turning into niche airlines," said Alan Sbarra, vice president of Unisys R2A Transportation Management Consultants. "That's the reality." As airlines try to adapt, some trends are emerging. Among the possible changes observers listed for the Star-Telegram:
-- Fewer hubs. Airlines will likely scale back some hubs and close others while increasing city-to-city flying, expanding use of RJs and adding lucrative international flights.
-- Simpler fares. Competition from discounters and the growth of online bookings are promoting a simplified approach.
-- Fewer airlines. Some troubled carriers may not survive, easing competition for those that make it.
-- Steeper cost cutting. Big airlines that have already slashed employees' salaries and trimmed staffs may need to do more to shrink the cost advantage of discount airlines. It could mean more concessions.
"To get from here to there is going to be extraordinarily difficult," said Michael E. Levine, a law professor at Yale University who previously worked at Northwest, Continental and New York Air.
