LOW FARES SEND FLIERS TO CLOUD 9.Byline: Evan Pondel Staff Writer With low-fare airlines slashing ticket prices and the bigger airlines cutting fares to compete, the sky is looking brighter for Southern California Southern California, also colloquially known as SoCal, is the southern portion of the U.S. state of California. Centered on the cities of Los Angeles and San Diego, Southern California is home to nearly 24 million people and is the nation's second most populated region, consumers. Frontier Airlines This article is about Frontier Airlines that was founded in 1994. For the company known as Frontier Airlines from 1950 to 1986, see Frontier Airlines (1950-1986). For the similarly named Frontier Flying Service see Frontier Flying Service. , Southwest Airlines This article is about the American airline. For the former Japanese airline, see Japan Transocean Air. For the British airline, see Air Southwest. Southwest Airlines Co. and JetBlue Airways For the Jet Blue database used in Exchange Server and Active Directory, see Extensible Storage Engine. JetBlue Airways is a major American low-cost airline owned by JetBlue Airways Corporation (NASDAQ: JBLU). are all maintaining their low-fare appeal this summer despite costlier jet fuel and other financial woes. Among the variables keeping low-fare airlines aloft is less demand for business class and fancy food on most domestic flights. ``As I look at it, airlines are going from the QE2 of the air to the Greyhound greyhound, breed of tall, swift, sight hound developed nearly 5,000 years ago in Egypt. It stands about 26 in. (66 cm) high at the shoulder and weighs about 65 lb (29.5 kg). buses of the air,'' said Michael Shonstrom, chief investment officer at Shonstrom Research Associates in Denver. Some major carriers believe that they must slash their fares just to compete with their low-price counterparts. For example, on Wednesday a round-trip flight from Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. to Denver in mid-July cost $238 on American Airlines American Airlines Major U.S. airline. American was created through a merger of several smaller U.S. airlines and incorporated in 1934. It continued to buy the routes of other airlines, becoming an international carrier in the 1970s; its routes include South America, the , the same price low-fare carrier Frontier was charging. With summer usually prompting more travel, analysts say consumers are likely to see better deals almost at the airlines' expense. ``Major airlines are getting aggressive, and they will continue to try to make it more painful for lower-fare airlines by chopping fares,'' Shonstrom said. But major carriers are also up against several other factors, including aging fleets that require more maintenance. In some cases airlines are dealing with 25-year-old planes. ``And it's surprising to me that airlines would continue to fly such old aircraft,'' Shonstrom said. Not so for Frontier Airlines. The Denver-based airline added three new 132-seat airplanes earlier this month, bringing its fleet to 44 aircraft. The company also recently added nonstop flights among Los Angeles, Philadelphia, Kansas City Kansas City, two adjacent cities of the same name, one (1990 pop. 149,767), seat of Wyandotte co., NE Kansas (inc. 1859), the other (1990 pop. 435,146), Clay, Jackson, and Platte counties, NW Mo. (inc. 1850). and St. Louis. ``We plan to cherry-pick the market,'' said Joe Hodas, a spokesman for Frontier. The company's financial performance is not as bold. Frontier posted a net loss of $5.8 million last quarter due to mounting fuel costs. Hodas said Frontier's expansion plans, including recently added destinations, should bolster revenues for the company. But this alone won't remedy the carrier's problems, he said. To keep costs down, many lower-fare carriers are paying for jet fuel in advance. The strategy is known as fuel hedging Fuel hedging is the practice, often employed by airline companies, of making advance purchases of fuel at a fixed price for future delivery to protect against the shock of anticipated rises in price. See also
In 2004, Southwest Airlines paid for 80 percent of its jet fuel upfront, avoiding the market fluctuations throughout the year. Spokeswoman Whitney Eichinger said the company was able to save more than $60 million by fuel hedging this year. Dallas-based Southwest also increased its fares, charging $2 more for flights greater than 600 miles and $1 more for flights less than 600 miles. American Airlines is also attempting to hedge its fuel consumption. U.S. regulators recently granted the airline the ability to reduce its reserve fuel on trans-Atlantic flights to 5 percent from 10 percent. Delta Air Lines is also accounting for its fuel consumption with greater scrutiny. However, the company painted a bleak outlook Wednesday, with deep wage cuts expected for pilots. The airline has already lost more than $3 billion and cut 16,000 employees in the past three years. ``Every airline is getting hurt right now,'' said Suzanne Betts, an analyst at Argus Research Corp. in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of . ``Companies like Delta have no fuel hedging, allowing the smaller guys to compete with a better price. I see that pressure ... continuing this summer.'' Evan Pondel, (818) 713-3662 evan.pondel(at)dailynews.com CAPTION(S): box Box: UP IN THE AIR Source: The airlines Daily News |
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