AIRLINES: LOSING ALTITUDE

DISCOUNT AIRLINES ARE STRUGGLING, EVEN AS THE MAJOR CARRIERS RAISE FARES. THE VALUJET CRASH STILL HAUNTS THEM, AND THE BIG GUYS CAN PLAY DOWN AND DIRTY

Given the airline industry's fundamentals--rising prices and full planes--low-priced airlines should be in first-class condition. They're not. In the aftermath of the ValuJet disaster last year, air travelers began to redefine "no frills" airlines as "no safety" airlines. In the six-month period after the crash, their bookings went into free fall, taking their stock prices along for the ride.

Launching a carrier into this turbulence isn't much more difficult than flying a kite in a hurricane. Yet Martin Shugrue, no stranger to troubled airlines, insists that Pan American World Airways, a new carrier with an old name, can compete as a...

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