Flying into the future
With Flight Companies filing for bankruptcy protection this week, and a number of U.S. carriers facing financial crises, what's next for air travel.
Even as low-cost, no-frills operations come to dominate the market, signs are pointing to the emergence of new niches in luxury travel. For passengers, the question will be: How much are you willing to pay to fly? In last year's Steven Spielberg film Catch Me If You Can, teenaged con man Frank Abagnale Jr., played by Leonardo DiCaprio, was captivated by the glamour of 1960s air travel. Enamoured with the airline stewardesses and pilots he watched coming and going from hotel lobbies, Abagnale adopted the identity of a Pan-Am pilot, leaving a trail of broken hearts and bad cheques.
It was a time when air travel was still classy and romantic, people actually dressed up for plane trips, and pilots and attendants radiated an air of celebrity. Passengers were not just excited by their destinations, they soaked up the entire travel experience -- the airline meals, the nice lounges, the attentive service.
But much of that romantic image is from an era gone by, and is now confined to movies and memory.
Even before war and terrorism kept some passengers home, new lower-cost players such as Southwest Airlines Co. of Dallas and WestJet Airlines Ltd. of Calgary had kicked off the revolution.
These companies operate with more standardized, smaller planes, no-frills service, one class of passengers, and direct point-to-point service, avoiding many of the costs of channelling passenger traffic through big hub airports.
The big airlines met the price challenge with a bewildering array of tourist and economy options, subsidized by the high fares paid by business passengers. In the growing economy of the 1960s to the 1990s, business would pay big bucks for comfort and for the flexibility of changing flight times on a whim.
But in today's hard-scrabble economy, with more and more low-cost competitors on the market, a lot of corporations won't pay the freight for the big airlines any more. With a new emphasis on price and value, the concept of what qualifies as quality has been totally altered, says Joseph D'Cruz, who heads the Aerospace Executive Management Program at the Rotman School of Management at University of Toronto.
"Initially, quality was defined by food service and lounges and those kinds of things," he explains. "The new idea is price-driven, or it is driven by things such as the reliability of arrivals, frequency of flights and the availability of direct, non-stop travel."
Even when they tried to emulate more flexible competitors -- by, for example, setting up their own no-frills operations -- the big airlines, with their highly unionized labour forces, have found it hard to compete.
Prof. D'Cruz says we are seeing what he calls the "Wal-Martization" of air travel: Service is cheerful but spare, and one level of service is assumed to fit every customer, particularly on domestic flights.
Business class is in jeopardy of becoming an endangered species, except on long-haul or international flights, on which travellers will still pay a premium for comfortable seats.
"Air travel was once exotic and elite, and now it is everyday and for everyone," Prof. D'Cruz says. "Now it is a mass market, but it is a Wal-Martized mass market."
The eventual result, he says, should be more flights with smaller aircraft and greater choice about where you can fly directly. As well, there should be good price deals for those who can plan ahead.
While the Wal-Mart model should prevail for most travellers, there is another significant type of air-travel transformation. Between the big carriers and the agile new players, new entrepreneurs will emerge to offer various niches of service, based on small distinctions, such as the quality of meals, types of in-flight entertainment or post-flight services such as tie-ins at hotels and restaurants.
For passengers, the key question will be: What are you willing to pay to fly?
Airline watchers say the old global mega-carriers, such as Air Canada, will still play a big role on international flights, and will still offer multiple classes of service on those routes. When business travel bounces back -- although it may never recapture its old market share entirely -- we may see the emergence of elite long-haul services on specially equipped aircraft, offering those who can afford it space, comfort and meals.
For domestic travel, travellers can expect the arrival of small air taxis that can zip into regional airports and eliminate long holdovers in central hubs such as Toronto, Vancouver, Chicago or Denver.
Prof. D'Cruz sees a future for air taxis and air limos, using a new kind of jet plane that is still being developed. These airplanes, with only four to six seats, will be capable of 2,000-kilometre hops from one small airfield to another.
The planes themselves will cost only about $1.5-million, and could be flown by younger, lower-salaried pilots. "That might allow executive-class services that are priced quite aggressively," Prof. D'Cruz says.
Some experts expect that even airlines that embrace the Southwest model will try to differentiate themselves in little ways. New York discount carrier JetBlue, for example, has introduced leather seats and television; other airlines are experimenting with in-flight Internet service on transatlantic flights.
Douglas Reid, who follows the airline industry as a business professor at Queen's University, agrees that simplicity will be increasingly prized by passengers, but people's expectations will vary with the length of the flight.
People going short distances will reward the carrier that offers the simplest and most direct package. On long distances, people still expect comfort and appropriately intensive service. "No viable carrier in the world does long-haul flights on the Southwest model, and I don't think there ever will be," he says.
Prof. Reid believes several basic models of airlines will emerge: ones that are focused entirely on price; and niche carriers that specialize in specific routes, such as Calgary-to-Toronto, and can provide superior service -- "overpampering" he calls it -- on those routes.
The big carriers will survive, but there will be fewer of them, as more cross-border mergers are permitted by governments facing the reality of the new competition.
But Louis Gialloreto, airline consultant and lecturer at McGill University, has a different view. As soon as the global economy bounces back and business travel recovers, he anticipates a raft of experiments, including more use of time-share plans for business jets, and luxury planes fitted out specifically for high-fare travellers.
He expects some long-haul airlines to dabble in totally segregating passengers by aircraft. Some planes will offer "cattle class," with hundreds of cramped fliers paying affordable fares. On other planes, seats will be stripped away to give more space to those who are willing to pay for the added comfort.
None of this suggests a return to Ward's heyday when, he says, passengers on his charter flights felt like "they were walking two feet off the floor." But any carrier that wants to survive in a new age of value has to consider all the possibilities.
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