Send In The Clones

Discount airlines are adding perks as quickly as traditional airlines drop them.

December 19, 2004|By Meredith Cohn | Meredith Cohn,SUN STAFF

Unable to differentiate themselves on price alone anymore, some of the nation's rising discount carriers have begun offering satellite radio, TV and leather seats - niceties that passengers usually associate with the traditional airlines.

Meanwhile, the cash-strapped traditional carriers, having long-ago eliminated more expensive extras like meals, now are resorting to steps like taking away pillows.

Both say it's a matter of survival to attract passengers and pay the bills. But as they add, subtract and change, the results are leaving airlines looking more and more alike.

"Once they match each other's fares, then it becomes a battle for every customer based on customer service," said Kevin Mitchell of the Business Travel Coalition. "The convergence on prices forces everybody to improve and try and differentiate themselves, which leads to further convergence."

AirTran Airways, the No. 2 carrier at Baltimore-Washington International Airport, demonstrates how that move toward the middle is taking shape. The airline founded as the no-frills ValuJet now offers business-class seating and recently added XM Satellite Radio.

Stan Gadek, chief financial officer, said offering the satellite radio sets AirTran apart while costing pennies per passenger.

"If I can offer you pretzels, I can give you radio and differentiate the airline by making the trip a little more enjoyable," he said.

Other discount airlines are adding services, too.

Low-cost carrier ATA Airlines announced its bankruptcy reorganization in October. But not to be undone by AirTran's upgrade to business class for as little as $35 a ticket, ATA also began a new, cost-conscious business-class service.

Even Southwest Airlines, the king of no-frills travel and BWI's leading airline, has responded to pressure from passengers and other airlines, recently introducing leather seats and promoting the move in TV commercials.

Seat assignments

A Southwest executive also recently said the airline is considering a break from a three-decade practice of refusing to assign seats in advance. It remains the only major airline to do this, making passengers line up at the gate. Southwest says the system helps ensure an airplane turn-around time of as little as 20 minutes. That keeps its planes in the air making money.

JetBlue Airways started what Chief Executive Officer David Neeleman calls the move to "bring humanity back to air travel" when he launched the airline in 1999.

The carrier offered leather seats, but was followed soon after by Southwest. JetBlue offered TV monitors at each seat and AirTran came back with the satellite radio.

The discounters have copied the traditional airlines' frequent-flier programs, although some base the perks on number of flights rather than miles flown. Meanwhile, Delta Air Lines revamped its frequent-flier program last week when passengers complained of changes that made it more difficult to secure tickets.

While the discounters try to be a little more like them, traditional carriers are trying to make up for the lost revenue from the reduced fares they must offer. Many have shed extras such as full meals and live agents to answer the phone and are charging for some things passengers used to get for free.

Pillows yanked

For example, Delta and others began charging $5 to $10 extra for tickets not bought on its Web site. US Airways started selling meals on some flights. And American Airlines recently said it would no longer provide pillows on shorter flights to save money.

Analysts say airlines always have stolen each other's moves.

But this intense battle to the bottom for fares, coupled with increasing costs, has elevated the pressure for carriers to set themselves apart with amenities and services.

Mitchell of the Business Travel Coalition said the benefits can take many forms - from the television and radio to better customer service at booking time, aboard the plane and even while communicating with passengers about a delay or cancellation.

"Airlines have never gotten gold stars for customer service, but now they have to try," he said. "Southwest is the model for highly effective customer service, and even they will be forced to improve as others catch up."

Southwest, the low-cost trendsetter, also has had to do more with less, in the face of increasing fuel prices and its decision to give hefty pay raises to flight attendants and pilots. To help pay for those costs, it has scaled back the number of workers per plane.

The pay boost at Southwest levels the playing field a bit for traditional airlines, said Mark Gerchick, director of George Washington University's aviation graduate program. He expects other discount carriers to face the same kinds of pressures as they mature.

"There is no God-given right of Southwest to be the lowest-cost airline," he said. "As a work force matures, you see costs go up."

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