Deal Could End Fierce Fight for ‘Shuttle’ Traffic
A merger of Texas Air Corp. and Eastern Airlines would abruptly end one of the fiercest of airline competitions--the battle between Eastern and Texas Air’s New York Air subsidiary over the lucrative New York-Washington and New York-Boston routes.
But the merger would probably not bring much change in fares or the frequency of flights on the two heavily traveled routes, analysts believe.
New York Air and Eastern have skirmished for five years over the two East Coast “shuttle” routes. The New York-Boston route is the most heavily traveled air corridor in the world, with 4 million passenger-trips a year; the New York-Washington leg is a close second, with 3.6 million passenger-trips yearly.
No Changes in Fares Seen
Among the travelers between New York and Washington are a large number of New York business executives and lawyers who commute on what is sometimes called the “power shuttle” to conduct government-related business in the nation’s capital.
Analysts do not expect a change in fare levels because both airlines are already charging relatively high rates and are attempting to compete on the basis of service. New York-Boston tickets are $65 during peak hours, while New York-Washington flights are $75.
New York Air jumped into the competition in 1980, offering fares as low as $29, but raised them when it found that it could not make money.
“The prices have been pretty high for some time, and I don’t think that’s going to change,” said Anthony Hatch, analyst with Argus Research in New York. “Most of their customers are businessmen who aren’t worried about price but will choose one over the other depending on service and convenience.”
The merger would not be likely to reduce the frequency of flights substantially, because the routes are big moneymakers, he added.
The shuttle routes are Eastern’s second most valuable, following the airline’s Florida routes. Eastern has been offering shuttle service for 25 years and still carries more than two-thirds of the Washington-New York passengers, analysts say.
The flights are often filled during the morning and evening rush hours and are nearly half full during the late morning and afternoon, analysts say.
New York Air has been trying to eat into Eastern’s business by offering snacks--”the flying nosh”--free newspapers and seats that are, according to New York Air, 25% wider.
The company has been pugnacious in its advertising as well. In one recent television advertisement, for example, the viewer sees a shower of falling goose feathers, followed by the slogan, “We clip Eastern’s wings.”
Eastern has fought back by emphasising its frequent-flyer program, which can earn travelers free trips to Eastern’s Florida destinations, among other spots.
Helane Becker, analyst with Drexel Burnham Lambert in New York, says the merger raises some possibility that People Express, the cut-rate airline based in Newark, N.J., will try to increase its role in the competitive service between the New York area and Washington and Boston.
The airline currently offers 19 daily flights between Newark and Boston and six daily flights between Newark and Washington’s National Airport.
People’s peak-hour fare is $59 on both routes.
But, in order to take on the current competitors, she said, People “would have to be prepared to take losses on the routes for years.”
