The U.S. airline industry is an ailing industry if there ever was one. United and US Airways are in bankruptcy. Most of the other big guys are barely surviving by the skin of their teeth.
Meanwhile, small upstart airlines are cleaning the clocks of the big carriers.
Small startups like Jet Blue have successfully competed — but not by meeting the big established players on their own ground. Rather, they compete effectively by changing the rules. Instead of offering airport lounges and first-class cabins, they offer cheaper fares and better service.
The small airlines also have used their not-so-secret weapon of technology — specifically, the Internet — to level the playing field. This comes from an article in yesterday’s Wall Street Journal (subscription required):
“All along, US Airways endured, thanks to its ability to charge extremely high fares to businesspeople. But the rise of the Internet undermined this advantage. Previously, only travel agents had access to computerized reservation systems. But with pricing information available at the click of a mouse, passengers could quickly find a $200 ticket on a route for which US Airways wanted to charge $2,000. In many fliers’ minds, the mileage awards, airport lounges, first-class cabins and other amenities offered by the big carriers no longer justified the higher fares.”
