Word: airtran
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...fallout may be fast, especially as Katrina's effects kick in. Delta Air Lines--the nation's third largest airline and AirTran's most powerful rival--may soon declare bankruptcy and cut back flights. Meanwhile, the labor strike at Northwest Airlines, the country's fourth biggest carrier, could drive it over the financial edge too. That would put a total of 5 out of 12 major airlines in bankruptcy (United, US Airways and ATA are already there). The same fate may await Independence Air, a small Virginia-based start-up that has been instrumental in driving fares down over...
...AirTran, based in Orlando, Fla., may stand to gain more from the looming industry restructuring, particularly a Delta bankruptcy, than any other carrier. For one thing, AirTran's bread-and-butter routes are in the eastern U.S.--where Delta and others will probably trim the number of flights and raise fares. Says Leonard: "We've been sitting here quietly for the past five years minding our own business and making money, but if three airlines pull down capacity as expected, that will be even better for AirTran...
...main reason AirTran is prepared for the turbulence: like the better-known JetBlue, its focus has always been on cheap tickets, low costs and reliable service. It offers the only low-fare business class in the industry. As a result, AirTran has stolen market share from Delta at Atlanta's Hartsfield-Jackson International Airport--Delta's primary hub.Leonard and president Bob Fornaro built AirTran on the ashes of ValuJet, which suffered a fatal crash in the Florida Everglades in 1996. In 2003, when aircraft prices hit rock bottom, they made a decision that looks prophetic today: they ordered 100 fuel...
...carriers struggle, Leonard is moving on their airspace. AirTran, which flies to 51 cities, will add flights to Detroit, Northwest's most important hub, starting in November. AirTran announced that it would start service there on the day it became clear a strike was likely at Northwest...
Going forward, Leonard knows AirTran's fate will depend largely on whether the Federal Government gets out of the business of subsidizing failed airlines. "As a nation, we are subsidizing failure on a grand scale ... And it needs to end," says Leonard. "There should be firm limits to bankrupt carriers' being allowed an almost never ending process of not paying their bills." But even if the government steps back and Delta and Northwest become significantly weaker, at least one serious rival is already moving in to pick up some slack. New York--based JetBlue, just five years...