Low-fare airlines gaining popularity in some areas

Our location in Springfield limits the number of airline choices we enjoy. But in many areas of the country, passengers can use low-fare carriers, saving money and receiving excellent service. For business travelers especially, connecting to these lines in other cities can save money, time and stress.

Pleasant service, and the difference in price between low-cost carriers and major airlines, is changing the domestic airline industry. Two low-fare airlines – jetBlue and AirTran Airways – are seeing expansion in the routes they serve beyond industry expectations. Although jetBlue continues to be called a low-fare carrier, it will soon rise into the ranks of majors by DOT’s definition because of its $1 billion in annual revenues. Now the company plans to offer passengers more by adding pay-per-view movies onboard, in addition to live television and XM radio. It is now deploying self-service kiosks in its airport locations and is in the process of developing corporate travel reporting this quarter. JetBlue also plans to add some Caribbean routes to its mainly East Coast routes with a few major east-west flights.

AirTran airline continues to be amazed at its own success. Five years ago the airline was operating with 45 airplanes, $5 million in cash and the oldest fleet in the world. It has recently announced an order for 50 new Boeing aircraft, making it the youngest Boeing fleet in the world today. It sells 80 percent of its tickets to consumers through either the Internet or its own internal reservation department. AirTran’s operating margins are so low as to place it among the top three with Southwest and jetBlue. Originally, all flights were hubbed in Atlanta, but it has since developed a network, primarily on the East Coast. It offers two classes of service and assigned seating and is developing long-haul West Coast routes.

These young airlines, patterned after the Southwest Airlines business model, are exploiting a relatively new business model for airlines that is being developed across the United States in direct competition with major carriers. The majors are beginning to follow the model and start their own low-fare carriers such as United Airlines’ Ted airline and others.

It will be interesting to observe the progress of this business model, which so far has been very successful, and to see how it finally affects the entire airline industry. Perhaps “low-fare” will eventually become the industry standard for domestic travel.