Welcome to Indigo, the upper-crust company that doesn't even call itself an airline. With most of the country's large carriers suffering financially and cutting back flights and amenities, a fresh flock of new and expanding niche carriers is rushing to fill the gap with wildly varying routes and styles of service. Indigo and an unprecedented transatlantic Boeing Business Jet service offered by Germany's Lufthansa Airlines are aimed at executive travelers. Others, like JetBlue Airways and AirTran Airways, are profitably targeting bargain hunters. Some are even more offbeat: Want to fly among skimpily clad hostesses from Atlanta or Newark, N.J., for a golf weekend in Myrtle Beach, S.C.? Try Hooters Air. Feel the urge to disrobe once you're airborne? Fly Naked-Air.
Rather than route flights through regional hubs and blanket the world with service like the traditional U.S. airlines, the upstarts offer flyers a patchwork of routes and a wide choice of onboard perks. The smaller carriers are choosing routes for which demand is brisk even amid a slumping economy and lingering fears of terrorism. That means smaller markets are being turned over to regional airlines or abandoned altogether.
Price-conscious trips today require more preflight planning than simply calling one or two major airlines that serve your city, but the potential payoff is huge. The typical fare has dropped 18% since 2000, although flyers might have to arrive at a secondary airport or bring their own dinner. And to the delight of their employees and shareholders, several of the smaller airlines are finding ways to boost revenues and profits in their niches. "What are crumbs for the major airlines are a full meal for us," says Dan McKinnon, CEO of tiny North American Airlines, primarily a charter carrier that flew more than 500,000 passengers last year from its base in New York City. Traffic is up 40% so far this year.
You can thank Southwest Airlines for the changes or curse it, if you are a competitor. Southwest, based in Dallas, created the basic-fare, point-to-point model the new discount carriers are adapting and profiting from. Five airlines today AirTran, ATA, Frontier Airlines, JetBlue and Spirit Airlines aspire to be the next Southwest, and at least two major carriers, Delta Air Lines and United, have launched or announced plans for low-fare, me-too subsidiaries (a second try for both).
The new low-fare carriers are obsessed with keeping costs down and treating customers well. They work hardest at employee relations, aware that labor troubles have helped sink several major airlines. The low-fare airlines shun extravagances, from linen napkins to fancy airport lounges. In contrast to some major airline CEOs, who pocketed hefty compensation packages even as their airlines were losing billions of dollars, executives at low-fare airlines are out helping load bags when necessary and are tying their pay to their firms' performance. The small airlines have also done away with or reduced the traditional charges for changing tickets or checking extra baggage all part of the pitch that they're grateful to have your business.
A big ally for the little guys is the Internet, which has illuminated the murky world of ticket pricing and has shifted power to the consumer and a cost advantage to technologically adept newcomers. The Internet has helped these carriers sharply cut distribution expenses and has also helped in advertising. "The Internet gives us a place in the storefront window," says Sean Menke, head of marketing for Frontier. "And for the price-sensitive customer, we'll benefit every time we go up against a major carrier."
The niche airlines' low-hassle style of flying has also set them apart. Especially since 9/11, travel through big, crowded airports has been a challenge. Smaller airlines gain an advantage by flying direct and often using less congested secondary airports, like the one in Long Beach, Calif., where JetBlue, based at New York City's John F. Kennedy International Airport, has established a big presence. Spirit, based in Miramar, Fla., uses Fort Lauderdale instead of Miami International Airport.