Increased competition in traditionally mainline carrier territory will fuel the expansion of US low-fare airlines next year, if the rhetoric from last week's third quarter results is to be believed, writes Darren Shannon.
Conversely, American Airlines' $1 million net profit and US Airways' $90 million net loss confirm doubts over whether US mainline airlines are managing to resolve systemic problems that have been plaguing them since the end of 1999.
Fleet expansion and capacity increases dominate the 2004 predictions of the chief executives of AirTran Airways, America West Airlines, JetBlue Airways and Southwest Airlines. The low-fare carriers reported higher third-quarter net profits of $19.6 million, $32.9 million, $29 million and $106 million, respectively.
Hints by AirTran that it has a place for the 50 Boeing 737-700s and -800s now optioned as part of the 100-aircraft deal recently signed with the US manufacturer, and Southwest's admittance that regional jets could be integrated into its rigid one aircraft type business model, have sent shivers through the top six mainline carriers. They had hoped small third-quarter profits and reduced losses had signalled a turnaround in their fortunes.
The low-fare carriers are not limiting their expansion to capacity. Southwest confirms for the first time that it is looking at an overhaul of its inflight product that could include entertainment and online connectivity, while online-dependent JetBlue, which sold 72.4% of its seats through its own web site in the third quarter, says it will expand its booking channels and customer services to capture passengers with less access to technology to assist its expansion into Boston and "one or two" other markets in 2004.
Source: Flight International
