ValuJet is giving up more than its name in the planned merger with fellow Atlanta startup AirTran Airways. The no-frills, single-class, open-seating service is going as well in a quest to attract the business traveller.
From November the new ValuJet, renamed AirTran Airlines, will no longer focus purely on a low-cost service. It will participate in CRSs and its separate business class will offer pre-assigned seating for $25 more than its regular one-way, full-fare economy tariffs. Full-fare economy passengers will also be able to buy pre-assigned seats at the gate; low-cost founding father Herb Kelleher avoids this but AirTran will follow the Southwest principle by continuing to eschew meal service.
Analysts are curious to see how the new concept will work out, pointing out that much of ValuJet's success before last year's Everglades crash was based on very low operating costs. 'Going after the high-yield passenger costs more, even without meals. But it's probably their only choice right now and it does distance them from the old ValuJet name,' notes one New York analyst.
AirTran's president and chief executive officer, Joseph Corr, is keen to emphasise the separate identity that the new strategy brings. 'It represents new vision, new leadership and really a new idea,' he says. 'Our goal is to offer a business class service that any business can afford.'
AirTran is not alone in turning its attention to the business passenger as the US low-cost sector strives to find new markets in a bid to survive. New York-based Kiwi International Air Lines is venturing into Boston, one of the highest-yielding markets in the US. By launching four daily Newark-Boston services, Kiwi is targeting business traffic with fares 30 per cent lower than the US majors. 'Kiwi will bring a level of sanity to this market with an affordable fare structure and no Saturday night stay-over requirement,' says Kiwi's president and chief executive officer, Jerry Murphy.
Other new services offered by Kiwi include Boston-West Palm Beach, Chicago-Tampa, and Atlanta-Tampa, bringing its total weekly flights to 220.
ValuJet's merger with AirTran follows the completion of Pan Am's deal with Carnival Airlines. 'We've concluded the wedding ceremony; now we have to make the marriage work,' says Pan Am. The merged operation still faces an uphill struggle in a difficult climate for start-ups.
Pan Am, which was launched just over a year ago, expects to announce some layoffs as it rationalises. It is also pulling out of New York-Los Angeles, where it faced heavy competition from the majors, to concentrate on east coast routes, chiefly to the Caribbean.
Martin Shugrue, Pan Am's chief executive, says the carrier is seeking a fresh injection of capital - perhaps as much as $100 million - to add to the $43 million startup kitty.
Source: Airline Business
