Why Low-Fare Airlines May Succeed

I can’t believe for as much that I talk about airlines in life how little I’ve talked about them on my blog. I could almost make an entire blog about it. For now, let me start by introducing this new category of “Airlines” with this post. I’ve been perusing the Internet as usual, and came across an article from MSNBC about why United is the worst airline. Of course I had to read it. I have an opinion on the best and worst airline, but my opinion of worst airline probably counts for nothing as the airline is now defunct-ATA. I guess ATA was low-fare but my one flight with them from Phoenix to Honolulu was bad. It was a really cramped plane, and no meal is even offered for a six-hour or so flight. It’s one thing not to give a meal, but to not offer a meal for purchase…wow. A very friendly couple sitting next to me insisted I have one of the sandwiches they had purchased at the airport because they didn’t want to see me not eat something substantial. I was garetful for that.

Well, I don’t know exactly why, but ATA crumbled in April of 2008 and completely shut down its operations. The number one factor for me when buying flights is price. So, I bought an ATA flight again for a trip from Honolulu to Las Vegas despite not really wanting to ‘suffer’ another ATA flight. The savings was nearly $100 off the next option. But then they went bankrupt and I ended up paying that $100 anyway to take another airline. It was just a very bad time for airlines-three more airlines that week shut down as well; another one based out of Hawaii called Aloha Airlines was a huge toll for the islands as it created a huge unemployment. But people still need flights, so I hope that those people have found jobs. I have an earlier related post to this: “I’m Grounded”.

But back to the original topic-I really can’t say I’ve had a very adverse experience with any airline. United is just too expensive for me to fly. But after reading the article from MSNBC.com, it lead me to believe that in a way, low-fare airlines are doing the best and may continue to see much greater success, which I think would be great. The article claims that Southwest is the industry’s only consistently profitable airline. This point was to exacerbate the point that it only has one class of service. That fact reminded me of my favorite airline which also only has one class of service-Frontier Airlines. This is in contrast to United, seemingly with four classes of service. The article concludes with what I’ve known all-along, which is that top executives will always prosper first, and if it means cutting employees, concluding some services and raising costs, that’s what it means.

It’s unfortunate that most buig businesses are run like this. It is predicted that this ‘airline’ war of sorts will result in another major airline, be it low-fare or not, will collapse in the near future. There was a point I was worried about Frontier being that airline, which would stink because it’s my favorite. But the developments I’ve seen in such low-fare airlines lead me to believe they may be farther from shutting down than some major airlines who continue to raise prices on things like baggage fees, which are fees that were never present before 2008 for domestic flights. My opinion on that is simple-it seemed necessary a year ago, but now that fuel prices are down it probably shouldn’t be there. However, to relieve the baggage fees and then reinstate them later should the fuel prices return to higher prices for the airlines would be confusing for passengers, and administration itself would be costly.

But Southwest, who is the only major airline without domestic baggage fees, is also reportedly the one with the most consistent profits. This comes at a time where other airlines are posting losses. Now, Frontier still charges the fees, but the instituted a new program in late 2008 called AirFairs which allows customers to purchase a slightly more expensive ticket (around $25) but be waived of the normal baggage fees for two bags, have advanced seat selection, receive 25% more miles, and get free DirecTV on the flight/s. The free two checked bags alone is already a savings of $15 because it’s normally $15+$25 for two bags. And the rest of the stuff is icing on the cake. I was very excited about this program that the very next time I flew, I made sure to try it out. I was very happy that I did so. In an earlier post, these kind of perks I mentioned were stuff you’d get only as an elite member of their frequent flyer program. I unfortunately don’t fly quite enough to be part of it.

But while United and other airlines are getting rid of services, I see Frontier and other low-fare carriers expanding services-both inflight, and to where they fly. And in airlines, it truly is all about market share. In my opinion, they’ve got the my business for the market of flying from my part of Ohio to the west coast and back. They do it the fastest of any airline because it is so direct-fly to Denver and then to anywhere on the West coast. And I feel like there are less frills, partially because I am flying out of a great airport (Akron-Canton Airport), but also because at their hub in Denver they have a nice little section for Frontier flights in one of the concourses, which is great.

I do find the concept of higher classes of service interesting. I suppose if you have tons of money it would make sense to be able to fly slightly better. On the other hand, I feel like economy class passengers are the ones who take the hit on these flights. I feel more like a first-class passenger on Frontier with their ‘Classic’ fare with the ability to watch live TV for free because of the fare I bought. Having the higher classes of service may bring in a ton more revenue, but interestingly, high-end seating dropped 22% in April. And no airline likes empty seats because it means that they are flying the same flight but making less money on it. Northwest had the right idea with offering a low price with their flight from Honolulu to Seattle, despite it also being cramped with 3-3 seating versus a wider jet with 2-3-2 seating. But they filled every seat both times I flew them. They even offered me $300 and a night a hotel, and I almost took it; this was to alleviate the overbooked flight.

I seem to be going all over with this post. But essentially, I think that low-fare airlines who have less to risk and earn less profits than the bigger ailrines who fly internationally may be the ones who gain the most from all of this. I don’t see the bigger airlines offering great deals like the ones Frontier offers with DirecTV, and Southwest with their low fares and free checked bags. So I see a good future for these guys. The structure they have will take them far. And don’t get me wrong-my second favorite airline is Northwest (soon to be just Delta) with their system of flying internationally and offering a regional airline for more local service from their hubs. Of course I don’t prefer these smaller flights-I don’t think anyone does-but at least it lets me fly the bigger guys when I need to (to Hawaii and Japan, for example) while still getting service to my local airport.

In the end, though, should one airline drop from the radar so to speak, I think we’ll see it being one of the bigger guys. It’s a shame to see any business go under, but I feel like companies like United may be building a trap for themselves with their higher priced flights and their cutbacks. So we’ll have to see what happens in the end.

MSNBC article: http://www.msnbc.msn.com/id/25083833/