It may well be that new, low-fare airlines have no chance of
competing against their bigger, mighty brethren.
It is not merely because the big guys have the power of their
brand names, hub systems, frequent flyer programs, CRSs and so on.
It's because they can -- and often do -- repel any attack on their
systems by matching any service or fare advanced by the tiny
airlines, even an absurd discount available for only 24 hours.
The megas' strategies have the little guys complaining in
Congress and prompting the Transportation Department to investigate
whether the giants unfairly compete by offering such things as
overrides to agents. The freedom to compete, lest we forget, is
what airline deregulation is all about.
* * *
The question ultimately comes down to: Is there anything that a
new airline can provide that one of the big guys can't or
That's why a recent move by Detroit-based Pro Air to sign up
guaranteed business from gigantic corporations is so fascinating
and right-minded. The tiny airline that began with only two 737s a
year ago (July 4) slapped Northwest in the face by signing a deal
with GM and Chrysler, locking in current fares out of one of
Northwest's major hubs, high-priced Detroit, for five years.
In exchange for the discount service, GM and Chrysler are giving
to Pro Air an unstated monthly fee. To be sure, Pro Air only serves
four routes, offering fares of $69 between Detroit City Airport and
Indianapolis, and $79 between Detroit and New York (Newark),
Philadelphia and Baltimore.
Chrysler expects to save up to $3 million and GM up to $6
million annually by using these services, moving 25 to 40 employees
and top suppliers a day. In addition, the firms' employees, spouses
and dependents under 21 are offered a leisure travel standby fare
of $25 per flight.
U.S. corporations for years have proved to be no match for the
big airlines. This move injects a bit of competition into the
picture. It does not stop Pro Air, which has been shopping other
companies in Detroit, from making other deals and growing in that
fashion. It is the way to compete.