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JetBlue's pullback stokes fears over fares
Friday, March 09, 2007

When JetBlue Airways pulled its daily evening flight to Boston this week, business traveler Denise DiPasquale began fretting about the reaction from US Airways. The region's dominant air carrier historically has slashed fares when competitors arrive, only to raise them once they back out again.

Sure enough, when Ms. DiPasquale tried to book a new Boston trip around the same time of day, the price on US Airways was suddenly more than $400 one way, more than doubling what she had been paying on JetBlue. Flights at other, less convenient times might have been cheaper but required 14-day advance purchases -- part of a new widespread sale Tempe, Ariz.-based US Airways has launched to keep up the pressure on the much-smaller JetBlue and other rivals .

"I fear this sale is an attempt to run JetBlue out of the market," Ms. DiPasquale said. "If they succeed, I worry we will return to some of the highest airfares in the country."

JetBlue's Boston pullback is reflective of the hold that US Airways continues to have on local flying, being accountable still for about half of all traffic at Pittsburgh International. What JetBlue faces is the same challenge that tripped up other low-cost entrants in the 1990s -- lukewarm support from the local business community and entrenched buying patterns on the part of corporate travel planners and frequent fliers.

Pittsburgh International is littered with the past failures of low-fare upstarts that came and went due to US Airways' market power and its ability to match prices on certain routes. A decade or so ago, ValuJet, Nation's Air and JetTrain all started and then ended service to Pittsburgh International. Independence Air followed in the early part of this decade only to fold early in 2006 amid a larger industry slump.

ValuJet later changed its name to AirTran Airways and, amid high expectations, launched service to New York, Philadelphia, Chicago and Atlanta from Pittsburgh. But due to a lack of local support, it dropped the flights to New York, Philadelphia and Chicago.

Airport officials are concerned the same could happen with JetBlue, which launched service to Boston's Logan International Airport and New York's JFK Airport last summer.

If "the business community is not responding to the lower fares and service being provided, [JetBlue] very well could pull their service out," said Allegheny County Airport Authority Director Kent George, who runs Pittsburgh International. "That is a reality we face all the time."

Changing old flying habits is difficult, especially for frequent fliers who may still have still an allegiance to US Airways, he added. "JetBlue is having a difficult time getting the people who are flying to Boston to change the way they buy their tickets, the carrier they use. It is akin to what we faced years ago when AirTran came in and was knocked out of New York, Philly and Chicago by competition."

JetBlue spokesman Bryan Baldwin said the Forest Hills, N.Y., airline knew it would "take awhile for the market to achieve its full maturity" and that "we still have room to grow and room for improvements.''

But "we definitely need the support of the community to create that demand,'' he added. Traffic is not "where we would like to be."

The airline pledges to restore the Boston flight May 1, giving it two a day again. It has no plans to cut back on the four daily flights to New York's JFK , Mr. Baldwin said.

US Airways claims it is not targeting JetBlue.

Spokesman Phil Gee acknowledged that the company did put restrictions on its lowest fares to Boston this past week but that the restrictions have been "removed." He claims it was a "temporary action" related solely to the company's merging of old reservation systems this past weekend and unrelated to JetBlue's pullback.

"If anything, we have recently lowered fares in most Pittsburgh markets to stimulate local demand," Mr. Gee said in an e-mail. "In most of those markets, JetBlue is not our competitor."

There is recent proof that a low-fare carrier can do well in Pittsburgh. Two years after launching service here, Dallas-based Southwest Airlines already is the airport's second-largest carrier, after US Airways. This Sunday, it will initiate new service to Baltimore/Washington International Airport, giving it 23 daily flights, compared with about 150 from US Airways. Utilizing three gates, it also serves Orlando, Fla., Philadelphia, Chicago, Las Vegas, Baltimore, Phoenix and Tampa, Fla.

It is true that Pittsburgh once had the among the highest air fares in the country, back when US Airways considered Pittsburgh a monopoly hub and offered more than 500 daily flights from here. But one result of US Airways' recent pullback has been the new competition -- and a drop in prices. Pittsburgh's average fare of $139 is now tied for 13th lowest among major U.S. airport markets, according to statistics from the U.S. Department of Transportation.

And while connecting traffic is down due to US Airways' hub dismantling, local traffic is up, meaning more Pittsburgh-area people are driving to the airport and taking flights all around the country. The number of so-called "origin and destination" travelers has increased more than 30 percent in the last five years, from 3.2 million to 4.2 million people. "That's a significant increase," Mr. George said.

First published on March 9, 2007 at 12:00 am
Dan Fitzpatrick can be reached at dfitzpatrick@post-gazette.com or 412-263-1752.