How long can the big airlines survive?

The once-friendly skies of the nation's major airlines have gotten a little reserved, even irascible of late. And six months from now, the atmosphere at 30,000 feet could deteriorate even further.

Air travel has been undergoing a steady metamorphosis since 9/11, with carriers shrinking legroom, pulling free meals, and even eliminating complimentary pillows. And thanks to high oil prices and intense competition from upstarts like Jet Blue and Southwest, the process is only accelerating.

That's put the so-called legacy carriers in a position that some analysts say just isn't sustainable. A few, like US Airways or United, may go under in the next few months. Others could suffer a slow, steady decline, while the most successful of the former giants in the sky may simply morph into bigger versions of their low-cost nemeses.

"It's good news for the airlines that they've been able to accomplish what they have in terms of cost-cutting," says Kevin Mitchell, president of the Business Travel Coalition, which represents corporate travel executives. "But the long-term trend is still declining yields, so it's not a pretty picture."

Since deregulation in 1978, the nation's major airlines have thrived in a boom-and-bust cycle, economizing during recessions only to rake in money once economic indicators started looking up again. But in this last economic upturn, the majors continued to lose money. Because of high fuel prices, they're on track to lose an estimated $5.5 billion this year.

That means, as Dave Swierenga of AeroEcon Consulting puts it, "They have not filled up their barns, they haven't prepared themselves to weather the next downturn."

As the economy slows, it's going to become even more difficult for them to borrow money. Without good credit, the legacy carriers will find it difficult to buy the new planes needed to meet growing passenger demand. And because they're not rebuilding their fleets with more efficient planes, they also won't be able to bring their costs down as fast as they need to in order to keep up with the low-cost carriers.

"I see that as a serious threat to the future of the industry, at least when you're talking about the next 10 years or so," says Mr. Swierenga.

But Swierenga isn't ready to write off the majors yet. He contends that they've proved to be "vigorous competitors" by pioneering such cost-saving innovations as check-in kiosks. Some majors are also picking up on the cost-saving strategies employed by the low-cost carriers.

For instance, JetBlue and Southwest fly primarily point to point, in other words, direct from one destination to another. As soon as their planes land, they clean them and fill them back up again. The legacy carriers operate in what's called the hub-and-spoke system. They bring in as many planes from different locations as possible into a central hub location and give them an hour or more to unload so people can make connections. That's good for the consumer who doesn't have to wait around too long to catch a connecting flight, and it gives the airlines a much bigger network and geographic reach. But the downside is that it's inefficient: The planes sit on the tarmac unused, and crews have longer waits between flights.

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