Low-cost carriers starting to compete with majors
There are predictions that the low-cost air carriers, which recently were seeing record profits, will scramble this year to compete for the first time with legacy airlines on price, according to analysts.
“The low-cost carriers are now going to be in for the battle of their lives,” said Terry Trippler, who tracks the industry for myvacationpassport.com, quoted in the Orlando Sentinel.
While low-cost carriers such as JetBlue Airways and Southwest Airlines are setting new standards for customer service, the traditional legacy carriers such as Delta Air Lines and United Airlines will be forced to compete on price, according to his prediction’s.
“I think the price wars are going to be started by the legacies, and the two of them are going to battle and the consumer is going to win in 2007,” he said.
But at the same time, fares may be going up.
BCD Travel Consultants, a group that tracks global corporate travel trends, projects fare increases of 6% to 10% for 2007. Corporate airfares are projected to go up 7% to 11%.
That’s in line with other sectors of the travel industry such as rental car prices, hotel rates and food and beverage costs, which are projected to rise between 5 percent and 8 percent, according to published forecasts by BCD Travel.
Analysts also predict more talk about consolidation.
US Airways’ attempt to take over Delta, if successful, would free up valuable assets such as airport gates and equipment in key markets such as New York.
News reports say that JetBlue, Frontier Airlines, Spirit Airlines and AirTran
Airways waiting to see how they might benefit from a consolidation.
In general, analysts expect some degree of airline recovery this year.
Report by David Wilkening
David
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