Marketplace Report: Ailing Airlines
ALEX CHADWICK, host:
Back now with DAY TO DAY. I'm Alex Chadwick. ATA Airlines emerges from bankruptcy today. The company is meeting with investors to assure them that it has a plan to become profitable. Marketplace's Janet Babin is here. Janet, ATA has got a lot of work cut out for it. The airline industry is undergoing a transformation, isn't it?
JANET BABIN reporting:
That's right. There are way more low cost carriers now than there were just a few years ago, and they serve a lot more people than the old traditional airlines. According to aviation consultant firm S.H.and E., about a third of all U.S. passengers now fly on low-cost carriers. So, what's happening is the discounters like ATA aren't just competing with the lumbering giants of the sky, so to speak, but also against each other, and that's a lot harder to do. But Samuel Engle with S.H. and E. says ATA has one big advantage.
Mr. SAMUEL ENGLE (S.H. and E.): Going into bankruptcy, ATA inked a partnership with Southwest Airlines, which is the leading low-cost airline in the country, and that has extraordinary marketing power. ATA and Southwest are cooperating, to some degree, that helps Southwest sell seats on ATA's aircraft.
BABIN: So, Engle's point is that you have to do a lot more these days than just be a low-cost carrier to make money, and this alliance with Southwest really helps ATA to stand out.
CHADWICK: So, it is taking steps to get better.
BABIN: Yeah, it's taking the traditional steps that airlines take. You know, it's cut its cost by reducing it's workforce by almost a third, and it ended flights from about a dozen cities. The company says it's now going to concentrate on leisure travel, and its military transport business. ATA is one of the charter airlines that the military uses to send personnel all over the world. So, the increase in sending soldiers overseas has really helped their business.
CHADWICK: Even so, even with cost cutting, airlines always say, well, there is something costing us more money, and now it's the jetstream.
BABIN: Yes. That's what we hear, Alex, and one airline expert I spoke with, Richard Gritta, says, you know, next the airlines will be blaming God. But, apparently, this is really true. This jetstream excuse is valid. The headwinds usually kick up in the wintertime in North America, but they've been stronger in the month of February than they've been for a decade, and the airline says this increases fuel costs, and can make planes late. Captain Terry McVenes is with the Airline Pilots Association.
Captain TERRY MCVENES (Airline Pilots Association): I've had to make stops with the airplane. We couldn't put enough fuel and passengers on the airplane to go from the East Coast to the West Coast nonstop.
BABIN: And so, you might think as I did, Alex, that with the wind in your face one way, it's going with you the other, but Captain McVenes says it's not enough to make up for the fuel that airlines have to spend fighting the jet stream. Coming up later today on MARKETPLACE, we're in New Orleans for Mardi Gras.
CHADWICK: Good. Janet Babin of public radio's daily business show MARKETPLACE, produced by American Public Media.
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