TRAVEL INSIDER : Two New Airlines Woo California Customers : Transportation: Reno Air and Family Airlines hope to find a niche in the cheap-flight market.

From a distance, it doesn’t seem sensible. While this country’s major airlines slash and flail at each other, chalking up bankruptcies and historic losses as they go, upstart carriers keep springing up between the supposed cracks in the air travel marketplace. Between Jan. 1, 1991, and Sept. 17, 1992, federal records show, 38 new air carriers submitted applications to the U.S. Department of Transportation.

“Anyone can start an airline,” one Long Beach travel agent warned last week. “It’s a little scary.”

Still, if you’re a West Coast traveler looking for cheap flights, two upstarts--one now in the skies, one still in formation--may be worth studying. The one already flying, and offering some of the lowest fares to Seattle and Portland from Los Angeles, is Reno Air. The one on the drawing boards, which pledges an even more drastic departure from airline business as usual, is Family Airlines.

In many ways, the model for both of these “niche” airlines is Southwest Airlines, the Texas-based carrier founded in 1971 with a strategy of sticking to relatively short flights, keeping simple fare structures, and avoiding most major hubs. (In Southern California, Southwest does use LAX, along with the Burbank, Ontario and San Diego airports, but doesn’t use Orange County’s John Wayne Airport.) In 20 years, Southwest built its fleet to more than 139 planes. It was the only major U.S. airline to report a profit in 1991.

But other new carriers have tried similar strategies and failed. Still other start-ups have announced themselves but never reached the skies. Of those 38 applications filed with the Transportation Department between January of 1991 and last month, records showed, 22 were dismissed, withdrawn from consideration or were still pending.

“There’s a steady stream of them,” said department spokesman Bill Mosley. “They think they’ll get financing, or think this or that will happen, and it doesn’t.”

Given all that, newcomers have a skeptical public to woo. Here’s how Reno Air and Family Airlines plan to try.

Reno Air (800-736-6247) raised its start-up money with a $6-million public stock offering that closed in June. In July, it started flying to Los Angeles, Reno and Seattle. The carrier has already added Portland and San Diego to its schedules.

Fares for a Los Angeles-to-Seattle flight, connecting through Reno, run about $100 for a nonrefundable one-way coach ticket purchased more than 14 days in advance, $200 for a round trip. Los Angeles-Portland connections cost about the same. For northwest-bound Southern California travelers, layovers in Reno are usually less than an hour.

(Other airlines, including Mark Air and Alaska, have made a limited number of tickets available at comparable prices, without a stopover in Reno on the way between Los Angeles and Seattle. But most advance-purchase round-trip coach tickets on other airlines, especially around Christmas, run at least $240.)

Reno Air’s president and chief executive officer is Jeff Erickson, who served as president of now-defunct Midway Airlines until late 1989. Its chosen vehicle is the McDonnell Douglas MD-80, configured to seat 20 first-class travelers and 120 coach travelers.

With just one plane in the air in July, the company’s seats were 62% full. The next month, with four planes flying, seats were 58% full--well above projections, Reno Air officials said. (On the company’s reservation line, the recorded voice suggests that callers avoid long telephone waits by booking tickets through a travel agent.)

Now the airline is about to put up its fifth plane--all are leased, and none was built before 1990. Two big expansion moves are scheduled in coming weeks: On Nov. 1, the airline plans to add two flights between Ontario and Reno. On Nov. 18, it expects to add five flights between San Francisco and Reno.

“We don’t want to threaten anyone,” said Reno Air communications manager Sue Putnam recently. It may not sound like much of a battle cry, but it’s not surprising in a marketplace where the biggest companies are enduring losses to keep competitors from gaining a foothold. THe marketplace is complicated.

“Everybody thinks it’s such a bad time to start an airline,” said Putnam. “But prices to lease aircraft are much lower because of the way the market is, and you have a much better selection of personnel. I think the average flight time among our pilots is around 25 years. A few years ago, you were robbing the cradle to get pilots.”

On several fronts, Reno Air’s approach is more modest than revolutionary. It gives its first-class travelers baskets of Nevada- and California-made cookies, cheeses and the like. Its biggest discounts go to travelers who buy tickets 14 days in advance of their flights. Those buying seven days in advance get a lesser discount. Friday and Sunday flights carry higher prices.

One gambit that stands out: Reno Air has built its system around one-way fares. In striking contrast to most other carriers, whose prices severely penalize one-way fliers, Reno Air charges one-way travelers half as much as round-trip travelers. (By contrast, if this month I booked a Los Angeles-Seattle coach ticket 14 days in advance with American Airlines, I would pay the same for a one-way ticket--about $300--as I would for a round-trip ticket.)

Family Airlines has not yet gotten off the ground (and has no 800 number yet). But the Las Vegas-based company has already attracted industry attention with its no-frills strategy and streamlined pricing plans. If its founders can muster the necessary financial backing, and federal approvals are granted as airline officials expect, first flights will depart in January.

“We intend to cater very closely to families traveling with kids,” said Alan Loflin, the carrier’s vice president for corporate communication. “We only have three fares in the entire system: $249, $149 and $49. Every passenger on every flight will pay the same fare.”

The $249 fare is for round-trip flights between Newark and Los Angeles, and between Los Angeles and Honolulu. The $149 is for round-trips between Newark and Miami, and the $49 fare is for Los Angeles-Las Vegas round trips and Los Angeles-San Francisco round trips. (One-way fares from Los Angeles are tentatively set at $35 to San Francisco and $149 to Newark or Honolulu.) Introductory fares may be slightly lower.

Children under 2 fly free in parents’ laps, or at full price if parents prefer a child safety seat provided by the airline. All other children pay full price. There is no first class. Free soft drinks are included, meals will cost extra, and alcohol will not be found.

“It’s not that we have some moral thing against serving alcohol,” said Loflin. “The cost of handling alcohol aboard an airline is exorbitantly high. By not doing this, our bottom-line costs are lower.”

The Family Airlines ticket-sales strategy is another cost-cutting move. Bypassing travel agents and the expense of commission payments, the carrier plans to make reservations available principally through airport locations and by mail through its Las Vegas reservations center.

The carrier’s founders plan to open with three to five leased Boeing 747s (no deals signed yet), each configured to hold 500 to 550 seats.

To raise start-up funds, the company is now making a private stock offering. The chairman and chief executive officer is Barry Michaels, 50, an entrepreneur who has been associated with printing, cosmetics and chiropractic supply firms in Southern California--and has never worked in the airline industry.

The new airline’s pilots Loflin said, will be Pan Am alumni, as will many of the carrier’s flight attendants.