'No frills' airlines nip at the heels of industry giants
When the breakfast roll came, 30,000 feet over south Jersey, it was dropped unceremoniously on my fold-down tray - no plate, no napkin. When the beverage cart arrived, somewhere over the foggy Rhode Island coast, most of the passengers had given up hope and devoured their small, dry danish. Pampered, we weren't. But for a $39 Washington-to-Boston flight, nobody griped.Skip to next paragraph
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Not all of the new ''no frills'' airlines nipping at the heels of the veteran carriers are quite that spartan. Still, a growing number of people are willing to forgo in-flight meals and tote their own belongings aboard a handful of new carriers which have sprung up since the industry was deregulated in 1978.
There's some question as to how long the newcomers in the skies can continue to undercut the fares of the established carriers. But there's no doubt that in 1981 - a year most airline executives would like to forget, due to the air controllers' strike and a sluggish economy - the companies with bargain prices did a booming business.
The airlines offering the stiffest challenge to the trunk lines are PEOPLExpress, New York Air, Midway Airlines, and Air Florida. Although a few regional Western airlines have expanded their operations somewhat, the biggest price wars have been in Eastern and Midwestern business centers.
PEOPLExpress, which took to the air last May, flew an increasing number of passengers each month through December despite disruptions in service due to the air controllers' strike. New York Air, which started up in December of 1980 and was the first to rival Eastern's Boston-New York-Washington shuttle, flew 1.6 million passengers in its first year.
A few regional carriers have tossed their caps into the big-time ring since deregulation began. Air Florida, which began in 1972 as a one-plane hop from Miami to St. Petersburg and Orlando, now services the Eastern US, Europe, Central America, and the Caribbean. Its ''revenue passenger miles'' (RPMs) - a more accurate measure of productivity since it accounts for the number of miles and passengers flown - was up 160 percent last year.
In contrast, financially troubled American Airlines last week announced a 1.3 percent decrease in RPMs and a $34.8 million loss in the fourth quarter of 1981.
Piedmont Aviation has been in business since 1948. But its new ear-catching radio jingle declares: ''We've only begun - we're up and coming, shining like the sun.''
So it seems. With an expanded route system and ''hopscotch'' flights that cost as little as half the price of some nonstops, the company's RPMs jumped 36. 9 percent during 1981. Rather than challenge the large carriers for dominance in large cities, Piedmont has adopted the big-fish-in-the-little-pond strategy and targeted medium-size cities such as Denver and Richmond, Va.
Another important statistic is ''load factor'' - the percentage of seats filled. The Chicago-based Midway Airlines, which started flying a few months after deregulation began, reports a load factor of 59.1 in 1981, up from 50.0 in 1980. One of the behemoths, Eastern Air Lines, experienced a sharp drop in load factor from 61.3 percent in 1980 to 55.8 percent last year.
What's giving the smaller guys the edge?
''They don't have the large, entrenched costs that we do,'' complains a Trans World Airlines (TWA) official. The airline maintains its own food service kitchens in a number of cities, as well as costly maintenance hangers. Most of the no-frills carriers serve no full meals, partly because the flights usually are less than two hours long. Some charge extra for beverages and snacks.
''Because we're new, we're not encumbered with a lot of the stuff the others have built up - mainly high overhead and employee benefits,'' says Doris Nielsen , a spokeswoman for New York Air. Most of the young carriers have a predominantly nonunion staff at the low end of the pay scale. In contrast, flight attendants for United Airlines have an average 12 years of seniority.