And you thought the cheepies were for backpackers and sightseeing familes didn't you?
Low-Fare Airlines Lure More Business Travelers
By DAVID CAY JOHNSTON
RODNEY BARSTEIN, who owns a chain of 225 women's casual clothing
stores in the Eastern half of the country, has a business plan:
where Southwest Airlines goes, his Simply Fashions stores follow.
"As Southwest has announced new cities, we have used that to
decide where to go," Mr. Barstein said recently, explaining that
cheaper fares help lower his business costs. "We opened in
Baltimore after they did, and in October they started flying to
Buffalo, so we are looking for locations in there. I see that
Southwest plans to go into the Tidewater area of Virginia in
Mr. Barstein, who flew on Delta Airlines until Southwest came to
his home base of Birmingham, Ala., more than a decade ago, was a
forerunner in a growing trend by businesses to switch their travel
from the major carriers to low-fare airlines such as Southwest,
JetBlue, AirTran, Sun Country, Vanguard, Shuttle America and
More than 60 percent of corporations are increasing their use of
low-fare airlines, according to a June survey by the National
Business Travel Association, an organization of 1,500 corporate
travel officers at the Fortune 1,000 largest companies. A year ago
that figure was just under 50 percent and five years ago, only 36
percent, said Eugene C. Laney, the association's director of
information and legislative services.
Mr. Laney said that recent air fare sales by major carriers were
prompted by a continuing shift of business travelers to low-fare
carriers. That migration has been driven in turn, he said, by
falling corporate profits.
Most airlines, major and discount, reported a slight decline in
the percentage of seats sold, known as load factors, in July,
although the discount carriers America West and JetBlue reported
higher load factors. Despite the weakening economy, load factors
were still high, with 77.4 percent of seats sold at the nine
largest airlines, down from 79.6 percent in July 2000.
High seat sales have some negative implications for vacation
travelers who fly on discount airlines. As those lines sell more
seats, chances rise that a vacationer will get a middle seat or one
that does not lean back. On airlines without advance seat
selection, such as Southwest, this increases the premium on
arriving early at the gate because passengers are given numbered
boarding passes, with the first to arrive boarding first. With
airlines that offer advance seating, such as JetBlue, picking a
seat in advance by telephone or Internet is also more important.
The discount carriers, unlike the major airlines, have few spare
planes (JetBlue plans to add a second spare later this year), which
means that if a flight is canceled for weather or mechanical
reasons it can be hard to get on the next flight because so few
seats are available.
On the other hand, the discount carriers often impose smaller fees
to change an advance-purchase ticket. While most of the major
airlines charge up to $100 for such changes (if they allow them at
all), Southwest imposes no charge; JetBlue's, for example, is $25.
The corporate shift to low-fare carriers is not limited to lower-
and middle-level employees. A fifth of JetBlue's revenue last year
was charged to American Express corporate and platinum cards, often
carried by business executives, said Gareth Edmondson-Jones, a
spokesman for the airline.
While the major carriers often match the lowest advance-purchase
fares offered by low-fare carriers, they typically make only a few
seats available at these deep discounts. Business travelers
primarily use walk-up fares or those purchased just a few days
before travel, and here the discount carriers often offer
substantial savings. For example, JetBlue's current walk-up fare
between New York and Buffalo is $105 ($100 for tickets bought on
the Internet), while US Airways charges $286.75.
However, some discount carriers — including JetBlue, Shuttle
America, Sun Country and Vanguard — do not have frequent
flier programs. That means given a choice between the same
rock-bottom fare on JetBlue or US Airways, for example, US Airways
is actually more desirable because of the value of the frequent
flier miles. (AirTran's and Southwest's frequent flier miles are
good for tickets only on those respective airlines.)
The effect of competition is dramatic. Four years ago Buffalo had
no discount carriers and the nation's second-highest air fares. Now
it has five discount airlines, the number of passengers is up 50
percent to 4.2 million, and its air fares are 64th on the federal
Department of Transportation list.
Luiz F. Kahl, chairman of the Niagara Frontier Transportation
Authority, the state agency that runs Buffalo's airport, said:
"Four years ago many management teams were afraid to fly low-cost
airlines, but with JetBlue you have all new planes and I think
there has been a dramatic change to acceptance of the low-fare