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The low-fare airlines' operations are simpler and leaner; their
labor costs are much lower; they do not have the financial burden of
pension obligations to thousands of retired workers, a major expense
for the older carriers; and crucially, they have not annoyed their
customers nearly as much.
On the low-fare carriers, passengers are not pampered, but they
do not expect to be. People who might be disappointed with the
quality of a United meal - or resent being forced to pay extra for
one on a Ted flight - do not seem to mind when Southwest gives them
just a drink and a bag of peanuts, because that is all Southwest has
ever promised them.
While a segment of the market is still willing to pay premium
prices for a substantially higher standard of service, it exists now
mostly on long-haul and international routes. Flights of just a few
hours have become a commodity bought strictly on price, and the
market won't bear the fares that the big airlines need to cover
their costs. So, in their current form, these companies are not
viable any more. The question for the traditional carriers now is
whether they can transform themselves into something like the
low-fare carriers, or find niches where they can still thrive.
US Airways and Delta have each said in recent weeks that they
would drop hubs and eliminate thousands of jobs in an effort to rein
in costs. Each hopes to make its operations more like their low-fare
rivals. But those hopes depend on the willingness of their workers
to accept new cuts in pay and benefits, and investors to pump in
more money.
Once the public would have had an emotional investment in the
fates of storied names like Delta and United: witness the anguished
reaction to Pan Am's closure in 1991. But not now.
There was some sympathy for the airlines in the dark days after
Sept. 11, but despite the bailout that Congress approved after the
attacks, the industry is still in turmoil, and the continuing
drumbeat of bad news has had a numbing effect on customers.
"It's been three years since 9/11, and I think they just have no
energy to get awfully disturbed" about the traditional airlines
troubles, Professor Cappelli said.
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