How the Airlines Put the Squeeze on Passengers

As airlines become more streamlined and profitable, flyers face even unfriendlier skies

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Jeffrey Milstein

Ninety-two flights sat on the tarmac at a U.S. airport for more than three hours.

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American and United have ordered hundreds of new jets, which theoretically could make life better in the air. The 787 Dreamliner, for instance, has a cabin altitude pressure of 6,000 ft., meaning you will suffer less from jet lag. But you might suffer elsewhere on the jet. Boeing has configured the long-haul Dreamliner with eight seats across in the coach section, with an option for nine. Likewise, it has offered its extended-range 777-300ER with nine seats across the back, with an option for 10. Typically, only charter outfits opt for sardine seating. But some airlines, like United and Japan's ANA, are converting to or ordering nine across in their Dreamliners. The loser gets seat 33-F, LAX to Tokyo. And on its 777s, American has opted for 10 seats, 3-4-3 across (meaning each row has four middle seats). Aviation designers are even broaching the idea of making middle seats narrower to offer the cheapest of the cheap seats.

The next day, homeward bound, I'm on another 757. A different carrier. And a better seat. An upgrade! This time it's United, from LAX to JFK, and there's evidence that the airline, newly consolidated with Continental, is trying to raise its game after a rocky start. The Los Angeles--to--New York and San Francisco--to--New York flights are among the most profitable routes in the U.S., and United has upped the ante in business class. The company has given up a couple of rows of coach seats to install lie-flat seating and everything else you would normally associate with transoceanic travel. American and Delta have no option but to match the offer, and they are doing so.

The seats have just about everything--and they should, given that their cost to the airline can easily exceed $50,000 apiece. There's a shelf for things like mobile phones. The individual in-flight entertainment includes movies, audio, games and the ability to connect your iPad or iPhone if you have the right cable. There's a USB port. And there are meals, served on actual plates, with unlimited wine and beverages. (This being a morning flight, coffee and juice will suffice.)

Business-class seats in the transcontinental market are typically priced from $3,000 to nearly $5,000. That's what has lately lured JetBlue into the premium market. It will begin business-class service on the coast-to-coast route next year, at what will likely be half the current market prices. "Our competitors all have that front-cabin product that creates a subsidy for them," says JetBlue's St. George. In other words, United can use the revenue generated in its business class to offer cutthroat coach fares against JetBlue's single-cabin coach offering.

Experts say this move by JetBlue and Southwest's expansion into international travel suggest that the days when low-cost airlines differentiated themselves from legacy carriers are over. They are now all fighting for the core corporate customer, plus as many leisure travelers as they can entice. Southwest, which thrived on its one-size-fits-all model, is now separating the herd with early-check-in fees; having acquired AirTran, it also has business-class seats to sell. "It's a hybrid world," says Pomeroy. St. George rejects that idea and says JetBlue is instead bringing innovation to another overpriced market.

It Can't Get Worse, Probably

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