Summer Airline Predictions

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Vanity Flights

Decades ago, Kimberly-Clark executives were infuriated by the lack of flights to its hometown of Appleton, Wisconsin. It eventually launched its own air service, derisively called Air Kleenex, but it morphed into the highly regarded Midwest Airlines. (Kimberly-Clark has moved to Dallas; Midwest is now based in Milwaukee.) Companies all over the country are griping about lousy service in markets where their travelers need to go, so there's always a chance one of them will step up. And watch the U.S. skies for the ultimate vanity airline: Kingfisher, named after the well-known Indian lager. Vijay Mallya, the bombastic boss of India's United Breweries, plans to bring Kingfisher's lavish in-flight service and crimson-colored aircraft to the San Francisco-Bangalore route later this year.

The Return of Charter Airlines
Charter airlines have largely disappeared in the United States in the 30 years since deregulation, but they continue to be a potent force in many other developed nations. If oil prices stay in the triple digits, charters will make a comeback here too. That's because charter flights are perfect vehicles for vacation fliers. They run only when they are needed and are usually sold as part of a package that includes lodging and car rentals. Spared of the need to advertise and market heavily and fly on profitless days when traffic is light, charter operators can make money on routes where traditional scheduled carriers struggle.

Rallying Regionals
The bigger-is-better mentality of the nation's post-deregulation legacy carriers flies in the face of economic realities: There are very few economics of scale in the airline business. The legacy airlines have grown in the last 30 years by absorbing or merging with smaller, regional competitors. They often promptly begin to gush cash on the same routes where the regionals were neatly profitable.

So logic—the words logic and airlines rarely appear in the same sentence—dictates that city-specific and regional airlines make a comeback. As the legacy carriers contract, they'll vacate markets that could be profitable for smaller, more focused startup airlines. After all, old-timers still pine for Air Atlanta and New York Air, airlines that reflected the needs and sensibilities of their hometowns. Californians still carry the torch for the state's beloved AirCal and Pacific Southwest, both of which disappeared in mergers. And everyone misses Piedmont Airlines, a stylish midsize carrier that flew profitably until it was gobbled up by the company now known as US Airways.

One final thought: Some business travelers, especially those whose frequent flying is on relatively short routes, will never return to the sky. They'll outfit their cars with some of the comforts of home and office, grit their teeth at the price of gasoline, and drive wherever they need to go. It'll take longer, of course, but they'll travel on their own schedule and will feel virtuous for having abandoned the indignities of airlines, airports, and security-checkpoint shakedowns.

The Fine Print…
J.D. Power has released its 2008 airline ratings. Not surprisingly, JetBlue Airways fared best. Tied for worst: Northwest Airlines and United Airlines.

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