Coffee, Tea or Lorenzo?

March 27, 1993

Judging Frank Lorenzo's plan to start a short-haul, low-fare, no-frills airline based here is difficult without passing judgment on the man himself. Mr. Lorenzo is such a controversial -- a polite way of saying detested -- figure in the airline industry that his presence overshadows the particular issue involved. But that avoids the question whether his idea stands on its own merits. The two matters need to be considered separately.

Mr. Lorenzo, who has headed major airlines that later plunged into bankruptcy, believes he has found a niche for an airline operating along the East Coast, providing low-cost but comfortable and efficient service between cities from Boston to Florida. It would fly only where large numbers of travelers want to go, at times they want to get there.

He argues that similar services elsewhere have forced fares down on those routes but stimulated traffic so much that total revenues rose. Southwest Airlines is a successful example. So, Mr. Lorenzo argues, was People Express until it started acting like a major airline. Everybody gains, particularly the traveler looking for convenient service without nonessentials like hot meals and advance seating.

At the same time, the airline industry as a whole is in a bad way. Almost no one is making a profit. The larger airlines are cutting back. Just last week United Airlines threatened to turn some of its short-haul routes over to feeder airlines, including Southwest, if its unions did not grant concessions. On the other hand USAir, the major carrier at Baltimore-Washington International Airport, may rely more on its core short-haul services. Perhaps economic recovery will stimulate an upsurge in travel, but for the moment it does not look like a good time for anyone to start a new airline.

Mr. Lorenzo sought some assistance from Annapolis to locate his base at BWI, which could badly use more traffic and employment. In the face of bitter union opposition, officials have backed off. But the state aid was not crucial. He could proceed if he wants. BWI could not deny him facilities he is willing and able to pay for.

His track record as a dismantler of airlines makes Mr. Lorenzo an unattractive prospect for state help. And it would be foolhardy for the state to undercut USAir, whose health is vital to BWI. Yet Mr. Lorenzo may have a good idea, one that would serve area travelers well. Even if his effort fails, good ideas don't remain orphans for long.

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