Low-fare Airlines

When Northwest Airlines—like the other major American carriers, United, Delta, US Airways, and American—posted a staggering financial loss for the year 2002, the company trotted out the all-too-familiar airline industry complaints: Iraq, 9/11, a sagging economy, and taxes.

More significant from a traveler's point of view was Northwest's concern about the growth of so-called low-fare carriers. The airline's gloomy annual report stated that these discount carriers now influence the price of 75 percent of U.S. tickets, versus less than 20 percent a decade ago.

Here's what Northwest was saying: Low-cost competitors—JetBlue, Southwest, Frontier, America West, ATA, and AirTran—are driving down the price Northwest can charge on almost any ticket. This is terrible news for Northwest.

On the other hand, it's great news for travelers.

Ticket prices have come down nearly 20 percent in the past three years.

Any airline can offer cheap fares, but true low-fare carriers (the pioneer was Southwest in 1971) are founded on the principle of offering low prices. Their operating structures make it possible to do this profitably, at least in theory. Each low-fare carrier has its own cost-saving tricks, but these airlines typically offer one-class bargain flights between major markets. They have also eliminated some or all of the traditional airline frills, such as assigned seats, meals, and airport clubs.

If you've never traveled on a low-fare carrier, you might imagine that "no frills" means shoddy service. Quite the contrary. JetBlue has televisions and leather seats. The flight attendants on Frontier are famously polite, and Southwest has one of the best on-time records in the industry.

Last spring, for the first time, Southwest transported more passengers than any other airline, and 4-year-old JetBlue has regularly posted double-digit profit margins that are the envy of the industry. Fast-growing AirTran, founded in 1993 with service out of Atlanta, recently expanded its routes to include San Francisco. Former America West Airlines chief executive Edward Beauvais has announced that in June he's launching a start-up low-fare carrier based in Pittsburgh, Pa.

"In the last 10 years, the low-fare carriers, led by Southwest, have been expanding at a rate probably double the industry's average growth rate," says Bob Harrell, who runs Harrell Associates, a New York City airline consulting firm.

The majors are taking note. Last year Delta launched Song, a low-cost carrier with service mostly on the East Coast. United's low-fare carrier Ted is expected to make its debut this February with a handful of flights out of Denver.

"Traditionally this hasn't been successful," says Harrell of the big airlines' attempts to penetrate the low-cost market. "But as with all good ideas, maybe it takes a few iterations to get it right."

Meanwhile, ticket prices have come down nearly 20 percent in the past three years and deals abound. Here's how to find them:

Work the Internet. Airlines often give discounts for booking online, and many offer Internet-only specials, such as Southwest's Click 'n Save tickets (www.southwest.com [3]), Frontier's Wild Weekend Web deals (www.frontierairlines.com [4]), and AirTran's Sale Fares (www.airtran.com [5]).

Look beyond the big travel sites. Orbitz and Expedia give the illusion that they're scouring the universe for cheap fares, but they don't list flights on JetBlue (800-538-2583, www.jetblue.com [6]) or Southwest (800-435-9792).

Try alternate airports. Many low-fare carriers operate out of smaller airports, such as Oakland International and Long Island Islip Macarthur. Even if you're flying a major carrier, the fare will generally be lower if you're going through an airport where the major carrier has to compete with a low-fare rival.

Major carriers and low-fare airlines: What's the difference?

VIA editors Bruce Anderson and Anne McSilver both recently traveled from Portland to the Bay Area. Anderson flew United; McSilver took Southwest. Here's how their experiences stacked up.

United

• Round-trip coach fare: $247
• Seating: assigned
• Snack: minipretzels
• Cost of Miller Lite: $5
• In-flight entertainment: TV and music; free headsets provided

Southwest

• Round-trip coach fare: $156
• Seating: unassigned
• Snack: peanuts and Ritz Air Crists
• Cost of Miller Lite: $3
• In-flight entertainment: Flight attendants sing "Happy Birthday"

Photo Illustration by William Duke

This article was first published in January 2004. Some facts may have aged gracelessly. Please call ahead to verify information.