Fly Luxe. Fly Cheap. Fly Naked!

By Sally B. Donnelly/Washington Monday, June 02, 2003

ILLUSTRATION FOR TIME BY HAL MAYFORTH

(2 of 3)

The niche carriers are also nimbler. When US Airways made the surprising move after 9/11 to shut down MetroJet, its low-cost subsidiary based at Baltimore/Washington International Airport, AirTran, with headquarters in Orlando, Fla., moved into that airport within weeks. It has now built a successful mini-hub there, with 22 flights a day. The low fares have been a boon to these once obscure airports: Midway Airport in Chicago which is served by AirTran, ATA, Frontier and Southwest now offers 22% of all U.S. flights from Chicago, up from 14% in 1997. And while many major carriers have cut flights, departures from Midway have grown 16% since 2001.

The small airlines are trying to prove that flying can be enjoyable again. JetBlue offers 24 free channels of LiveTV. Delta's low-fare Song subsidiary promises it will have pay-per-view movies and MP3 players by October. AirTran lets you upgrade to business class for only $35 above full coach fares and gives you Mrs. Fields cookies. Hooters Air's hostesses orchestrate humorous in-flight quizzes and pass out free hats and T shirts. "We're just trying to bring a bit of fun back to flying," says Mark Peterson, chief operating officer of Hooters. "It doesn't have to be so serious."

But fun doesn't mean frivolous. A crucial change for the niche airlines has been in their conservative approach to safety. Only a few years ago, many new airlines were dismissed as inferior or even less safe than established carriers, in part because many of them flew older aircraft. But government regulators and carrier executives have worked together to inculcate a rigorous safety culture. AirTran, Frontier (based in Denver) and JetBlue are either flying entirely new fleets or quickly acquiring new planes to replace older stock. That not only helps with safety and the perception of safety but also is good for the books, at least in the long run. While new Boeing 717s cost $37 million each on the front end, AirTran CEO Joe Leonard says they burn 24% less fuel than AirTran's remaining DC-9s and thus cost $500 an hour less to operate.

The niche airlines know they will need every edge they can find as competition heats up. As major carriers emerge from bankruptcy protection with lower labor costs and other new economies, they will be more formidable. Some big airlines are holding on to valuable airport facilities they aren't even using, and they are strong-arming airport managers to keep out rivals. Some of those rivals suspect that the major carriers are working together to beat them back. In early May, within days of one another, the Big Six (American, Continental, Delta, Northwest, United and US Airways) said they would impose a new $10 round-trip fare hike on June 1--a move that triggered an investigation by the Department of Justice. Under a 10-year consent decree, the airline industry forbids coordinated fare increases. The investigation continues. A spokesman from American, which initiated the fare hikes, says the carrier is "in compliance" with "relevant laws and regulations." Whatever the outcome of that case, the larger picture is that there's plenty of competition for a wide variety of air service, from business carriers to discounters.

The Next-Best Thing to Owning a Jet

There are some 3,000 on-demand charter operators nationwide, and the Internet has made it easier than ever before to book one of their jets. They fly everything from single-engine prop planes to the Gulfstream V, like the one your favorite movie star uses. Even small businesses sometimes choose this option for a multicity trip that gets the execs back home the same day. Many operators report that business is holding steady despite the slow economy.

A new type of charter lets clients fly on a sleek private jet without having to buy one or having to buy into a so-called fractional-ownership program. These services do, however, make customers prepay for blocks of flight time. Among the biggest carriers of this type are Delta AirElite Business Jets, a wholly owned Delta subsidiary based in Cincinnati, Ohio; Marquis Jet Partners of New York City; Sentient Private Jet Membership of Norwell, Mass.; and Bombardier Skyjet, based in Fairfax, Va. Through Delta's AirElite service, which launched in February, customers pay a minimum of, say, $144,500 for 25 flying hours in a six-passenger Lear 60 business jet and get frequent-flyer miles on Delta. These providers tend to specialize in travel within the U.S.--though if you want to go to London, some operators, such as Delta AirElite, can get you there too, on a larger private craft. These companies ooze discretion, and while they don't disclose the bottom line, they all report "significant interest."

A New Business Class

The international aviation industry is closely watching Lufthansa's new all-business-class service from Dusseldorf, Germany, to Newark (offered in partnership with PrivatAir), and some are even calling it the "new Concorde." The flight's VIP service and the absence of crying babies and scruffy backpackers have pleased the route's early passengers and encouraged the airline to expand service to Munich from Newark and schedule a Chicago-to-Dusseldorf flight starting in June. The carrier will not say whether the route is profitable, but it has been flying at a healthy 60% of capacity. Among U.S. business travelers, Indigo is attracting almost as much attention for its clever use of secondary airports like Teterboro and, starting in June, White Plains, N.Y. Indigo CEO Pete Pappas, a longtime American executive, is a seasoned pro who sweats the little things like promising a 6-ft. 8-in. frequent flyer a seat in the spacious exit row for all his trips.