The current climate of the airline industry is reminiscent of the early days of the Internet, as the biggest companies try to keep up with smaller, leaner competitors with fresh ideas.
The financial woes of the major airlines only got worse in 2002. United and US Airways both declared bankruptcy, and Delta and Continental (the only two airlines to have reported their full-year results at this writing) lost nearly $1.8 billion combined.
By contrast, JetBlue and Southwest stayed in the black last year. These so-called “low-cost” airlines, which are less expensive to operate and more customer-focused, are driving the airline industry by forcing it to run more efficiently.
Airlines with names you may not know?like JetBlue, AirTran, and Spirit?have the fewest fees and the least restrictive rules. Even better for consumers, they’re the companies responsible for keeping fares low.
The best fare sales are often initiated by the small airlines, usually on a regular schedule. AirTran, for example, announces a new systemwide sale every four to six weeks. Delta, its main competitor in Atlanta, usually moves quickly to match its fares, which helps keep prices down on any routes they both fly.
By contrast, many of the sales offered by big airlines don’t provide as good value. On January 2, American announced a sale that it touted as 40 percent off its regular fares. But the prices it quoted were typical for winter travel, and in some cases, were much higher than the low-cost alternative. For example, American offered flights from New York to Los Angeles for $318 round-trip; a sale fare on the same route from Southwest or ATA costs $198.
If you’re fortunate enough to have a low-cost carrier flying into your home airport, you’ll pay lower prices than you would without that competition. But sometimes you can use a less popular, alternate airport and realize the same savings.
For example, Chicago-bound travelers can’t use a low-cost carrier to fly into O’Hare, but by using Midway, on the city’s south side, they can fly on Southwest. You can fly to Los Angeles on JetBlue, if you’re willing to go to Long Beach instead of LAX. As an extra benefit, those small airports are often less crowded and easier to navigate.
For nine major metropolitan airports, we’ve listed the alternate airports and the low-cost carriers which serve them:
|Boston||Manchester or Providence||Southwest|
|Chicago (O’Hare)||Chicago (Midway)||AirTran, ATA, Frontier, Southwest|
|Dallas (Ft. Worth)||Dallas (Love)||Southwest|
|Houston (Bush)||Houston (Hobby)||Midwest Airlines, Southwest|
|Los Angeles (LAX)||Los Angeles (Ontario)||Frontier, JetBlue|
|Los Angeles (LAX)||Los Angeles (Long Beach)||JetBlue|
|Miami||Ft. Lauderdale||Frontier, JetBlue, Midwest Airlines, Southwest, Spirit|
|New York (JFK or LaGuardia)||New York (Long Island MacArthur)||Southwest|
|San Francisco (SFO)||San Francisco (Oakland)||JetBlue, Southwest, Spirit|
|Washington (Dulles or National)||Washington (Baltimore)||Southwest, Spirit|
Rules and restrictions
The smaller airlines also try to keep it simpler than the big guys when it comes to the fine print. For example, if you want to book one of Delta’s cheapest fares, you generally need to fly round-trip, travel midweek, and stay over a Saturday night. If you need to change your itinerary, you can expect to pay a $100 fee, and if you want to fly standby, it will cost you $25.
By comparison, low-cost airlines have fewer restrictions on their sale fares, and you can often fly one-way or avoid a minimum-stay requirement. You can expect that typical fares on the small airlines will follow these rules:
|Airline||Require Saturday-night or minimum stay?||Allow one-way travel?||Require advance purchase?||Change fee||Standby fee|
|America West||One-night stay||No||14 days||$100||None|
|Midwest Airlines||Yes||No||14 days||$75||None|
|Southwest||One-night stay||No||14 days||$25||None|
|Most major airlines||Yes||No||7 to 14 days||$100||$25 on Delta and US Airways|
Flying a lower-cost airline doesn’t necessarily mean giving up comfort. Imagine sitting in a leather seat in coach class, watching up to 24 channels of satellite TV, or perusing the card in your seatback pocket that gives yoga stretching tips to make your flight more comfortable. That’s what you can expect on JetBlue.
Most low-cost airlines don’t serve meals, even on longer flights, but as food service is scaled back throughout the airline industry, the gap with the big airlines is narrowing. Northwest and US Airways, as well as Midwest, are charging for meals on flights, so it’s possible that both types of airlines will one day provide more food service.
You can still expect complimentary snacks and drinks on the low-cost airlines, although you’ll have to pay for your own alcohol ($3-4 for beer or wine, $4 for cocktails), just like on most large carriers.
Frequent flyer programs
Many smaller airlines have designed frequent flyer programs that try to keep it simple when rewarding loyalty. The more often you fly, the more free tickets you earn, regardless of how far you fly or how much you paid for your ticket.
By contrast, most large airlines have complex frequent flyer programs that allow you to earn points for using a credit card, staying in a hotel, or other activities besides flying. Meanwhile, American is planning to <increase the miles you need for awards, and Delta and Northwest are making it harder to get elite status
Here are the basics of the low-cost frequent flyer plans, which can reduce your overall expenses even more if you fly often:
- AirTran: Three business-class or six coach flights earn you one free round-trip flight
- ATA: Three round-trip or six one-way flights earn you one free round-trip flight
- Frontier: Early Returns is one of the few mileage-based programs, but just 15,000 miles earns you a free round-trip flight (10,000 fewer miles than most airlines)
- JetBlue: TrueBlue is based on points, and 100 points earns you a free round-trip flight. Short-haul flights earn two points, cross-country flights earn six points, and you can earn double points if you book online.
- Midwest Airlines: Another mileage-based program; 20,000 miles earns you a round-trip flight
- Southwest: Eight round-trip flights in a year will earn a free flight; it doesn’t matter where or how far you fly, or how much you paid for your ticket
An adage that most businesses live by is that the customer is always right. Small airlines have done a better job of responding to their flyers’ needs with low fares, and greater simplicity in fees and restrictions. Plus, they embrace less costly business practices, such as concentrating on the smaller airports, keeping labor costs under control, and standardizing on aircraft types.
With the airline business under pressure to keep costs down and revenue up, expect that the greatest change in the industry will be driven by the companies who are the most consumer-friendly. They’ll be the airlines whose names won’t be unfamiliar for long.