America West Airlines entered into a dogfight with the nation's six largest airlines Monday by offering what it says will be inexpensive nonstop fares for transcontinental flights between New York, Boston, Los Angeles and San Francisco.
The company said Monday that the service will be popular with small and medium sized business travelers who are currently paying sky-high prices. The Tempe-based carrier promises walk-up fares in the markets for as little as $199 one-way.
Other airlines charge more than $900 for the same New York flights and more than $1,300 for the same Boston service, the company said. “We're really excited about this new strategic opportunity to bring low-fare service to the last major nonstop routes dominated by high cost carriers,” said Doug Parker, America West CEO. “Simply stated, it's what we call flying to the right airports at the right price.”
The new flights between Los Angeles International Airport and Boston Logan Airport and New York's JFK Airport will begin Oct. 26, flights between JFK and San Francisco International will begin Dec. 19 and flights between Boston and San Francisco will begin March 1.
America West said it will add another plane to its fleet in September and fly planes longer to offer the twice a day service in each market. It will also hire about 24 pilots and 75 flight attendants as a result of the new service.
Because America West already serves the markets through connecting flights, there will be little need to relocate employees in the Valley, said Janice Monahan, company spokeswoman. Other than time changes on some flights, the company said the impact to its hubs at Phoenix Sky Harbor International Airport and Las Vegas would be minimal. There are no plans to change the connecting flights that go through the hubs on their way to California and other destinations, the airline said.
“This service will represent 5 (percent) to 6 percent of our capacity, which means there's not going to be any significant changes that are going to occur in either Phoenix or Vegas, ” said Scott Kirby, executive vice president, sales and marketing. “Phoenix and Vegas are our most important strategic assets today and they will continue to be going forward into the future. The only way it has an effect is it strengthens America West financially, which is good for those markets and good for the local community.”
Kirby added the move could open up additional markets if the airline's costs continue to remain low.
“We're not going to give you a list of specific markets . . . that we would go into next, however, historically we have constrained our scheduling to looking at opportunities to fly out out of one of our hubs,” he said. “By removing that constraint, we've moved into these four markets and there a lot of additional possibilities out there that we looked at when we chose these four markets and that we could move into over time.”
Breaking into the already crowded routes will be tough for America West, said Perry Flint, managing editor of Air Transport World magazine, a business publication for airline managers. JetBlue Airways, which has lower operating costs than America West, offers nonstop service from JFK to Long Beach, Calif., and Oakland and its walk-up fares are the same, he said. Low-fare leader Southwest Airlines offers service from Long Island Islip Macarthur Airport to Baltimore/Washington International Airport and then on to Los Angeles and Oakland, he said.
America West will also have to contend with larger airlines in the markets, including American Airlines and United Airlines, carriers with name recognition and larger frequent flier programs. American already matches JetBlue's fares on routes where they go head-to-head, Flint said.
“I think it's going to make American scream. I think it's going to make United very unhappy. I think its going to make a lot of travelers very, very happy. The most interesting thing is how JetBlue reacts to it.”
For the routes to be successful, America West had better not fiddle with the $299 price or it risks losing confused passengers, Flint said.
Kirby said the fares could increase as much as $100 on Fridays and days before holidays, but he said the vast majority will stay at the low price. While the company has a maximum fare it would charge for service in the markets, Kirby would not reveal what it is. Not only are the nonstop routes inexpensive but they are convenient for business travelers, the carrier said. From New York and Boston, the flights will depart for the West Coast at approximately 8 a.m. and 5 p.m., he said. They will depart from San Francisco and LA at 8 a.m. and noon.
“In both directions, these make for perfect flight times for the business customers,” he said. “There's still many business customers that prefer to fly into (Los Angeles International) and San Francisco instead of an alternative airport and this schedule will now give them that option for a reasonable price to fly into markets they need and want to fly in.”
America West's flights will represent between 7 (percent) and 18 percent of daily nonstop seats in each of the markets, the company said. It will use eight Airbus A319 aircraft, featuring 12 first class and 112 main cabin seats as well as in-flight audio and video entertainment on the new routes. Two factors will work against America West, Kirby said. In some cases, companies, including law and accounting firms, will continue to pay high fares because they pass them on to their clients, he said. He also expects the large airlines to strong arm their big corporate accounts.
“They will do things like say to Corporation X, ‘If you fly America West on any more than 1 percent of your flights, we will eliminate your discounts from New York to Europe,’” Kirby said. “And that will be enough incentive for some of the big corporate accounts not to move business to America West.”
Even with matched fares, the company said the new service will stimulate enough traffic the market will be full and its routes profitable.
Parker said his company is no stranger to retaliation from the “Big Six.” America West changed to a low-fare pricing structure more than a year ago and recently posted a profit for the first time in more than two years. “They'd hurt themselves,” he said of matching fares. “The carriers that dominate these markets, American and United, certainly shouldn't be in any position right now to be doing things that hurt their financials given their existing cash positions and their existing lack of earnings. We welcome competition, but we'll prevail in that regard because we have much lower costs than they do and certainly, relative to those guys, we have dramatically higher cash positions.”