Budget airlines gaining on traditional airlines - report

Airline Industry Information, April 5, 2005

AIRLINE INDUSTRY INFORMATION-(C)1997-2005 M2 COMMUNICATIONS LTD

According to a recent survey, five of the six top-rated airlines in the US are budget carriers.

The Airline Quality Rating study is based on US Department of Transportation statistics for airlines that carried a minimum of 1% of the 630m US domestic travellers in 2004. In the survey JetBlue Airways ranked as offering the best service, second was AirTran Airways, then Southwest Airlines, United Airlines, Alaska Airlines and America West Airlines. Comair and SkyWest were two regional carriers that were ranked for the first time this year.

The results of the annual survey reportedly show that airlines offering low fares and services to smaller cities are taking market share from bigger, traditional airlines. The results also show that regional airlines are showing up on the list for the first time, carrying enough passengers to do so.

In five years the budget carriers have gone from a 5-7% market share to a 25% market share, according to Dean Headley, one of the authors of the study and an associate professor at Wichita State University. The reason is that the budget airlines have a less complicated and more profitable route structure, making it easier to satisfy customers, according to Headley.

((Comments on this story may be sent to aii.feedback@m2.com))