Traditional airlines: endangered species?
You don’t have to appreciate statistics to understand the importance of this one: in just a decade, low-cost airlines have gone from 10 to 30 percent of the total market.
“The conventional carriers, in turn, have cut flights in most markets, shrunk or closed hubs, and farmed a lot of routes out to regional affiliates. They’ve even abandoned service to some cities,” notes USA Today.
"The biggest thing that has happened in this industry over the past decade isn’t 9/11, or recession, or SARS, or bankruptcies or mergers," says aviation economist Dan Kasper at LECG, a consulting firm in Cambridge, Mass. "It’s the deep-market penetration by the low-cost carriers."
The reshuffling has accelerated the past two years as high fuel costs and a recession-induced slump in travel took a toll on conventional or legacy airlines.
So far this year, only low-cost airlines have consistently posted much of a profit or done much expansion on routes, experts say.
Low fares are the obvious appeal of the discount airlines. But low prices alone don’t fully explain their success this decade. Some fliers not impacted by price are finding the lower cost carriers offer more destinations.
There’s also the issue of more flyers willing to accept a no-frills approach with a lower level of service. Some fliers say they are taking lower cost airlines because of friendlier ground and air staffs.
Another factor is fewer travelers.
Analyst Vaughn Cordle at AirlineForecasts says the situation actually is worse than it appears for conventional airlines.
"This is a major paradigm shift," Cordle says. "There’s just … fewer travelers out there, and less money to spend on travel, which obviously plays in the low-cost carriers’ favor."
No surprise that CEO’s at higher-cost carriers such as United and US Airways are looking to merge with lower cost carriers.
By David Wilkening
David
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