- The Washington Times - Monday, August 19, 2002

The restructuring of major airlines brought on by the September 11 attacks and a sluggish economy will lead to lower ticket prices but greater hassles for air travelers, a former airline CEO said yesterday.
In-flight luxuries such as meals and entertainment may become a thing of the past as some airlines redesign their business plans to compete against discounters such as Southwest and JetBlue, said former American Airlines CEO Robert Crandall on NBC's "Meet the Press."
"Over time, I think the public will find that air travel is less accessible, less ubiquitous and less service-oriented perhaps more efficient and more price-oriented but less convenient," Mr. Crandall said.
On the same program, another former executive said major airlines' use of airport hubs will probably change. Most major airlines use major bases, such as Chicago's O'Hare or New York's JFK airport, to offer the most flights. More price-conscious airlines, including Southwest and JetBlue, do not have their own major hubs, and use what is known as a "point-to-point" model.
Under the hub system, "you may have 18 shots a day to go from Syracuse to Duluth," said Michael Levine, a Yale law professor and former executive with Northwest and Continental airlines. "There's no way you can do that in the kind of point-to-point discount airline system that people talk about when they talk about Southwest."
Mr. Crandall, who helped pioneer the so-called hub system while at American, said it no longer offers the same revenue-producing power it once did, and should be eliminated.
"If the objective is to optimize the utilization of equipment and assets and make everything as optimally efficient as possible, and if the facts are that you do not need or cannot support the enormous frequency of flights, which we had before, then stretching out the hubs a bit, making people wait a bit more, using the equipment a bit more intensively, makes a lot of sense."
But, he added, "one of the outcomes is going to be that service will be considerably less convenient."
Fares on many major airlines are already close to the level of the budget airlines. United Airlines is currently offering trips to Boston or Chicago for under $150. Most major carriers cut fares last month some by as much as 40 percent in an effort to increase ticket sales.
In the case of US Airways, which had announced a big summer sale, the strategy failed, as the airline filed for Chapter 11 bankruptcy protection. United said last week it will likely follow suit. Both airlines failed to get loans from the government.
In addition to dealing with fewer flights and longer waits between planes, passengers will likely face even longer lines at airport security checkpoints. A Dec. 31 deadline for airports to begin inspecting every piece of checked luggage for explosives is fast approaching. Airport officials say they've been having trouble finding space for the large X-ray machines used in screening bags, and there are still questions about how effective the equipment is in detecting explosives.
Without enough employees or equipment, passengers could wait as long as three hours to have their baggage checked, one airport executive said.
Some airline analysts have suggest that consolidation is on the horizon, and compared the industry's recent struggles to those of the early 1990s, when both Pan Am and Eastern Airlines shut down. While some said the industry would benefit if struggling airlines went out of business or were taken over by competitors, Mr. Levine disagreed.
"I think the hope that consolidation will somehow save the industry is in error, actually," Mr. Levine said. "One of the problems the industry has had is that it has been very vulnerable to its labor groups. And if we consolidate very far in this industry, you'll get to a position where one of the labor groups will be able to take out one-quarter or a third of the industry capacity, and that will cause very, very severe difficulties for the public."
United Airlines said last week it would likely file for bankruptcy without major concessions from its labor unions.
This story was based in part on wire service reports.

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