Word: valujet
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...crash of ValuJet Flight 592 in the Florida swamps killed 110 people, shook up the FAA and made Mary Schiavo a star. What exactly happened? The FAA will release a full report Tuesday at a public NTSB meeting...
Discount airlines are still the most potent force in challenging the high fares in the majors' "fortress hubs." Before ValuJet resumed service between Atlanta and Dallas-Fort Worth in April, a round-trip ticket cost $490; subsequently, the price dropped to $138. Flying into an "alternative city" served by many discount carriers can also shave dollars. A round trip between San Diego, Calif., and Washington costs $564, but flying into Baltimore, Md., instead, a route now covered by Southwest, costs $268. "The low-cost carriers are driving the big guys crazy in cities where there was no competition," says Parsons...
Given the airline industry's fundamentals--rising prices and full planes--low-priced airlines should be in first-class condition. They're not. In the aftermath of the ValuJet disaster last year, air travelers began to redefine "no frills" airlines as "no safety" airlines. In the six-month period after the crash, their bookings went into free fall, taking their stock prices along for the ride...
...ValuJet has a new competitive problem too. When ValuJet launched its low-cost service in Atlanta, incumbent Delta didn't pay much attention. But Delta's service level crumbled as it tried to cut costs, and ValuJet proceeded to inhale market share...
Delta won't make that mistake again. This time it is consistently matching ValuJet's fares out of Atlanta. Delta now has a low-cost airline, Delta Express, to fight ValuJet on its own rock-bottom terms. This is a lesson that the other major airlines have learned in battling upstart competitors, to their considerable profit. Alas, for travelers, the major airlines' profit is the flying public's loss...