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From Majors to Discounters

The Wall Street Journal's Scott McCartney wrote a recent column on the shift in traffic from major airlines to their discounter rivals:

Fewer passengers are going to the old-line hub-and-spoke airlines. More passengers are choosing low-fare carriers. And, at least in the month of June, if you look hard at the numbers, you'll see there's a one-for-one ratio in the shift.

In June, the six biggest full-service airlines domestically flew 1.2 billion fewer revenue passenger miles than in June 2002. That same month, the nation's eight low-fare carriers flew 1.2 billion more revenue passenger miles than a year ago. A revenue passenger mile is the industry's standard measure of traffic, one paying customer flown one mile...

June, it turns out, was a great illustration of the shift that is going on in air travel. JetBlue Airways saw 63% growth in passenger traffic; ATA Airlines and AirTran both recorded traffic increases of more than 20%. Southwest Airlines, already the fourth-largest domestic carrier, notched growth of 5.2% in the month.

At the same time, AMR Corp.'s American Airlines saw its domestic traffic drop 4.1%. UAL Corp.'s United Airlines fell 2.6% domestically; Delta Air Line's traffic declined a hefty 5.3% domestically, and Northwest Airlines recorded a 4.3% drop in domestic traffic. US Airways had the biggest decline at 11.7%; Continental was the only full-service carrier to see its domestic traffic grow in June, with an impressive counter-trend gain of 3.4%.

Add it all up, and the shift is basically one-for-one. What the full-service carriers lost, the discounters gained. Anecdotally, we know lots of travelers say they have switched.

I've flown mostly American for the last 16 years. I have 1.5 million lifetime miles and currently hold Platinum status (I've been Executive Platinum in the past, and at 1 million miles became Gold for life). I've been a paying member of the Admirals Club for most of that time -- at least 11 years, I think. It used to be that all this counted for something. I'm not sure it does anymore.

Earlier this month, using frequent flier miles, I flew from Raleigh/Durham to Seattle and back for my vacation. Here's a quick summary of my experience:

  • Although I didn't want to spend the miles to do so, I had to fly first class because of a lack of coach seats -- and then had only one option on my requested dates in each direction.
  • At the Seattle check-in counter, the automated check-in line was considerably shorter than the first class line. Due to a change in my ticket, however, I couldn't use automated check-in, and instead of having someone simply fix my problem on the spot, I was sent down to the ticket purchase line.
  • When the pre-meal service started on the Seattle-Chicago flight, I was especially hungry and so asked for a second bowl of nuts. Nope, I was told. American used to stock extras, but no more -- now it's only enough for one small bowl for each first class passenger.
  • I try to avoid caffeine. American used to stock Caffeine-Free Diet Coke and Diet Sprite. Now, due to cost-cutting, they don't stock either. If I want a diet drink without caffeine, it's water or club soda.
  • The Admirals Clubs still stock the same old lame snacks, one snack per club. They still force members to go across a large club to a bar and ask for soda, rather than stocking open refrigerators (as do international clubs and some clubs of domestic airlines, like Alaska's).
  • As, I suppose, perverse compensation for the lame snacks, Admirals Clubs now offer overpriced meals -- in other words, members pay to belong to the club and then have to pay again to eat anything beyond snack mix. Of course, bringing food from the outside is banned, giving them a semi-captive audience.
The major US airlines are cutting service to the bone to bring their costs in line with the discount airlines. But if they continue down this path to its ultimate conclusion, they'll end up with horrible service, yet they'll never be able to match the low cost and flexibility of the discounters' non-unionized work forces. In other words, they're on a path to failure.

I'm not anxious to start flying Southwest Airlines. If I fly a lot, and give an airline a lot of business, I'd like my seat selection to reflect that, rather than being based on how early I arrive at the airport. But if JetBlue served Raleigh/Durham, I'd be taking a serious look at it.

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