The Thrill Is Gone

Very early one morning, a limo deposited me, my laptop and my carry-on at the United Airlines terminal at LAX. Until recently--recently being Sept. 11, 2001--flying out of Los Angeles or any airport in any great city, even at the crack of dawn, was dusted with the vestigial glamour and excitement of the Jet Age. LAX was one of the glammest. The Theme Building vied with the ravishing Boeing 707 and Eero Saarinen’s TWA terminal at JFK International Airport in New York as the preeminent symbol of Jet Age elan. (When it opened in 1961, the restaurant--slung beneath the building’s parabolic arches--required jackets for men.) The airport’s smart International Style terminals, its celebrities -- Twiggy! Sophia! the Beatles! -- squinting into the Southern California sun fresh off a flight from Rome or London or Paris, confirmed the preeminence of jet travel and, by extension, of L.A. in the bustling New Frontierish world order.

Instead, what greeted me at LAX was the strange brew of pandemonium and tedium perfected in societies where unfettered travel, along with other civil liberties, exists only in theory. A 25-yards-long queue snaked from the terminal, where an Ellis Island-like tableau of sweating, cursing new-millennium masses yearned only to know which wretched line to join. I made my 7:30 flight with three minutes to spare after first being told to remove my belt, wristwatch, keys and titanium glasses while juggling my wallet, boarding pass and driver’s license as my boots were swabbed for traces of explosives. Stuffed into the aft cabin of a sold-out 747, I thought about a conversation I’d had with Robert van der Linden, the curator of air transportation at the Smithsonian National Air and Space Museum.

“Most people’s expectations about flying date from the popular culture of the ‘60s--the Jet Age and the mythmaking in that,” Van der Linden said. “How many movies begin with a 707 taking off or landing?” While watching the Steve McQueen classic “Bullitt,” Van der Linden said he was struck by the scenes at the San Francisco airport. “This was 1968,” he said. “There was no security. No one was checking IDs. There were no metal detectors.” He paused, adding with considerable understatement, “It was a lot easier to fly then.”

Among the casualties of the 9-11 terrorist attacks was a concept as wispy and sentimental as the cirrus in the pale blue yonder: that flying was somehow inevitably linked with style, glamour and sophistication. The appalling images of United and American airliners being piloted into the World Trade Center towers would seem to have obliterated whatever romanticism airline travel still possessed; vehicles for uplift--literal and metaphorical--transformed into weapons.

“I think when all of us saw that second plane hit it re-contextualized the airplane in all of our minds,” says John H. Hill, curator in charge of aviation for the San Francisco Airport Museums.

Running a gantlet of full-body searches to an oversold Airbus, it’s hard to imagine flying was ever anything other than a forced and sometimes fearful march. But flying was once indisputably glamorous. Pan American stewardesses were required to speak two languages (three was preferred), first-class compartments were outfitted with snug cocktail lounges and dinner might include chateaubriand carved seat side. Some of this lives on in the Lucullan first-class services on transoceanic airliners, but for the most part, flying’s shaken-not-stirred superfabulousness has been downgraded to standby. In fact, the upheaval subsequent to the 9-11 attacks was merely the finale to a long, insidious slide in standards throughout the industry. “Airline passengers are fundamentally changing their expectations,” says Dean Headley, a professor at Wichita State University’s department of marketing who publishes an annual report on airline performance. “Ten years ago people still expected airlines to be nice. That’s gone.”

Now, “going to the airport is even less glamorous than going to the station to get on a commuter train,” says Clay Timon, chairman of Landor Associates, the San Francisco company that created brand identities for, among others, Delta, Northwest, Japan Airlines, Cathay Pacific, and Song, Delta’s low-fare airline-within-an airline.

The airline industry is in its worst straits since the 1991 Gulf War, which tipped Pan Am and Eastern into liquidation. Although American, Northwest and Continental eked out profits in the third quarter of 2003, and United, which declared bankruptcy last December, dramatically reduced its losses from a year ago--the long-term prospects remain uncertain. The airlines lost more than $10 billion in 2002 and have cut more than 100,000 jobs and parked hundreds of planes in the Mojave for lack of passengers. Planes are flying at near-capacity partly because there are fewer of them flying. Some analysts estimate the airlines won’t fully rebound before 2005, and that further bankruptcies and even liquidations are inevitable. “Nobody knows what ‘normal’ is anymore,” says Glenn Engel, an airline analyst at Goldman Sachs. “If this is the new normal, it’s going to be a very long and painful restructuring.”

But while the airline industry is in an unprecedented financial crisis, it is also suffering from a less-publicized crisis of identity. With the public accustomed to airports reconfigured as security mazes leading to planes where first class-passengers slice their turbot with plastic cutlery, the underlying culture of airline travel is increasingly at odds with the reality of flying as an exercise in garment-rending frustration. (That goes for the cabin crews, too: a Northwest Airlines flight attendant was recently convicted for spiking a crying infant’s apple juice with Xanax on a flight from Amsterdam to Detroit last year.) Yet airlines continue to perpetuate rituals dating from the Eisenhower administration and even earlier. Service in the “cabin,” no matter how slovenly the passengers or surly the stews, is overseen by a “purser.” Your flight is under the command of a “captain” assisted by a “first officer” operating from a “flight deck,” nomenclature dating to the flying boats of the 1930s. The cockpit door may be barricaded and the pilots within agitating to pack heat, Saarinen’s magnificent TWA terminal shuttered and the Concordes headed for museums, but the hardened post-9-11 passenger is expected to swallow threadbare euphemisms--”in the event of a water landing,” anyone?--from the “Coffee Tea or Me” era.

“I think the airlines cling to them because they feel that the people flying the plane should have a level of formality,” says Jared Blank, an airline analyst for Jupiter Research. “But when juxtaposed with the actual flying experience, it seems strange rather than reassuring.”

Now that flying has been brutalized into a bottom-line obsessed commodity serving a clientele that has, so to speak, seen the man behind the curtain, an update would seem to be in order--less Oz, more Kansas. “We’ve reached a certain element of irrelevancy in what the airlines are offering versus what people want,” says Patrick Smith, a pilot for a major airline. “You’ve got two extremes: the old-style, doting-on-the-passengers, and the Southwest Airlines cattle call. Maybe what people are looking for is neither one of those things.”

At this nightmarish confluence of an uncertain economy, spiking jet-fuel prices and ruinous labor contracts--which the Air Transport Assn., in a report to Congress earlier this year, titled “Airlines In Crisis: The Perfect Economic Storm”--there lies a glimmer of hope. For the first time since the industry was deregulated, the airlines are being forced to reconsider their business models--in fact, their whole raison d’etre. And in that reinvention there may emerge a more coherent and--gasp!--user-friendly flying experience. It could scarcely get much worse.

“The airlines for the past 25 years have been killing any reason to care about their product,” says Henry Harteveldt, a travel analyst with Forrester Research in San Francisco.

The first crack in the go-go airline worldview began with the Airline Deregulation Act of 1978. Before that, ticket prices were set by the Civil Aeronautics Board, a federal agency that invariably approved petitions from the airlines to raise fares to cover costs. “Airlines couldn’t compete on price, only on amenities,” says Van der Linden. “That’s why you had all this really good food, anything to get you on the airplane.” Deregulation destroyed the old-boy airline network, eliminated the CAB and exposed the airlines for the first time to unrestrained competition. To use a favorite trope of Hollywood development geeks, deregulation was a “paradigm shift.”

“The day in 1978 when they deregulated the airlines, it was all over,” says Blank. “It sounds terrible, but because the masses could fly, the airlines needed to squeeze as many people on that plane to make the revenue.”

As fares plunged and fuel prices spiked, airlines scrambled to slash expenses. Out went the first-class lounges, the wasteful space between rows. No-frills airlines such as People Express, offering rock-bottom fares and minimal cabin service, briefly flourished before being driven from skies by the majors’ sheer size and marketing innovations, such as frequent flier programs. By the mid-’90s, airlines were making record profits as the boom supplied a seemingly bottomless demand for business travel.

Having tamed the upstart airlines, the majors kept fares high for business travelers unable to qualify for cheap advance-purchase fares, while nibbling at service standards. “Even in the ‘90s, the cost of food dropped from $4.50 per passenger at the beginning of the decade to almost $3 at the end,” says Engel. Skimpier meals were only the beginning. Fuel-efficient narrow-body aircraft replaced commodious jumbo jets on transcontinental flights. Passengers fumed. “Air rage” was coined.

And it was here, at their moment of greatest prosperity and omnipotence, that the airlines overplayed their hand.

Headley recalls seeing a bumper sticker that read: GET IN, SIT DOWN, BUCKLE UP AND SHUT UP. “That’s kind of the way airlines were treating people when demand was through the roof,” he says. “I’m convinced that, in ’98 and ‘99, when they were practically printing money, that the airlines knew exactly how far they could push their customers. The airlines are heavy users of consumer research, and I think in the late ‘90s they knew what that was and were absolutely taking it to the limit. They knew they were pushing people over the edge but didn’t care. It’s really haunting them now.”

The incredible irony is that this pound of flesh was extracted from the airlines’ best and most profitable customer. During the height of the boom, business travelers accounted for 20% of passenger volume but 40% of the airlines’ revenue. Held hostage by schedules, business travelers paid--and still pay--thousands more for the same seats and service as tourists on excursion fares. Meanwhile, the airlines began heavily promoting electronic tickets--which cost 25 cents to process versus $25 for a paper ticket--and, to marginalize travel agents, online reservations through their Web sites. The latter turned out to be a double-edged sword. With online booking, the airlines were handing an element of control back to the beleaguered business traveler. “They were charging him three to five times as much,” says Headley, “and then they gave him a tool that, with a little planning smarts, gave him a chance to level the playing field.”

Then came the bust of 2000. Then 9-11. Business travel, with its fat margins, collapsed and has yet to revive. As traffic plunged, Congress approved a $15-billion bailout for the industry. Just as the music industry painted itself into a corner by ignoring the song-downloading phenomenon while charging $18 for compact discs, so did airlines become overly reliant on business as usual. It may be too late for some.

“I fully expect that some existing major airlines will disappear in the next 10 years, either through mergers or an inability to sustain their operations,” Harteveldt says.

As the major airlines search for a new paradigm, they are closely studying the business model of an airline that started flying out of the moribund Long Beach airport only two years ago but has hit on a formula that fulfills the needs of both hardened road warriors and leisure fliers--and, thus far, makes money: JetBlue.

Launched in 2000, JetBlue provides single-class service shorn of traditional frills such as meals but has leather seats and live satellite television. The airline’s non-unionized cabin crews and more flexible work rules, among other factors, allow it to charge a fraction of the unrestricted coach fares of the majors. And it has been profitable practically from the start; shares in the airline have almost tripled since March alone. JetBlue took several pages from Southwest’s playbook, flying a single type of fuel-efficient aircraft--the Airbus A320, which streamlines maintenance--and targeting underused airports such as Long Beach. JetBlue’s cost of flying a passenger one mile -- a standard measure of airline operating expenses--is the lowest in the industry. “It costs United nearly $1,000 an hour to operate an A320,” says Harteveldt, the travel analyst. “It costs JetBlue [about] $300.”

Nevertheless, the post-deregulation era is littered with the wreckage of start-ups that competed solely on price. What helped put JetBlue over the top was polished service that neither the majors nor low-cost mainstay Southwest, with its dowdy aircraft and wisecracking flight attendants, could match. David Neeleman, JetBlue’s CEO and founder, once appeared on a panel at Yale University with Donald Burr, the founder of People Express. Neeleman says he told Burr that, regarding People’s famously low fares and famously cramped cabins, “It was fun to pay 19 bucks for the experience but you only do it a couple times.’ And he agreed.”

JetBlue’s cabin staff are quietly efficient, and its logo and livery are postmodernist homages to globe-trotting carriers such as Pan Am. Aside from Sir Richard Branson’s ever-flamboyant Virgin Atlantic Airways, JetBlue is probably the only airline that succeeds in having an apprehensible, contemporary sense of style. As the majors retrenched and clung to their threadbare service rituals, JetBlue proved that there was a market for low fares matched with smart, modern, judicious customer care and feeding.

“We’ve tried to say, look, we’ll get rid of the food because you don’t care about it anyway,” Neeleman says. “We’ll have some cool snacks instead and we’ll be liberal with those. We’ll do tray service so you can get up when the seat belt sign is off and not have a flight attendant tell you to sit down because you’re blocking the beverage cart. And we’ll do it all with a smile, as opposed to with a whip.”

All of which makes the few-but-cool amenities of JetBlue look less like a niche success and more like a business model with a future. “Some of the big airlines have so traded down their economy-class cabins that you’re sometimes getting less of cattle call on JetBlue than on one of the majors,” says Timon. And where business travelers mostly shunned the first wave of low-cost airlines, the now intense budget-consciousness of corporate travel departments coupled with the generally pleasant, professional atmosphere on JetBlue has further blurred the advantage of flying one of the majors. “Most low-fare airlines are people’s second choice,” says Engel. “JetBlue seems to be unusual in that people seem to like to fly it.”

Jetblue’s approach is being emulated not only by fellow low-cost airlines such as Southwest, which is considering upgrading the essentially nonexistent amenities on its sprawling fleet of 737s, but by giants such as United. With good reason. As the majors cut capacity to stem losses, low-fare carriers have relentlessly picked up the slack; they now account for 25% of the domestic airline market. Through smart marketing and word of mouth, new low-cost airlines have rapidly achieved brand recognition that differentiates them from the monolithic old-school airlines. “Never in the history of the deregulated airline industry has there been a better time for start-up airlines to come in and challenge the established carriers,” says Harteveldt.

Now the low-cost airlines are embarking on an expansion tear that increasingly will put them in direct competition with the majors. Orlando-based AirTran, an enduring thorn in Delta’s side since it was re-branded from ValuJet in 1997, has 110 planes on order to supplement its fleet of ultra-efficient Boeing 717 jets and now flies to Las Vegas and L.A. Next year JetBlue will put into service a fleet of mid-size jets that will serve smaller markets, while Southwest will take delivery of 47 new planes. Harteveldt points to Frontier Airlines, which has been pecking at United at the latter’s Denver hub in much the way AirTran has plagued Delta in Atlanta. Launched in 1994 with two planes, Frontier now flies 39 aircraft and is the No. 2 airline in Denver with about 15% of the market. “They’re swapping their old 737s for new Airbus A319s with in-seat TVs, free meals and snacks, plus Web check-in,” Harteveldt says. “They’re giving you more of a product than United.”

Which leaves the majors in the awkward position of trying to beat the upstarts while joining them. Delta drove JetBlue out of Atlanta’s Hartsfield International Airport only six months after it entered the market by waging a brutal, scorched-earth fare war. Nevertheless, Delta and United have launched low-cost airlines-within-an-airline, an approach abandoned in the ‘90s by United with its United Shuttle, which never was able to reach cost parity with discount carriers. (Virgin Atlantic plans to start a low-cost-with-frills spinoff in the U.S., perhaps based in L.A., by next summer.)

The difference this time is that Delta’s Song and United’s Ted--besides their gratingly twee, and in Ted’s case, utterly baffling, names--are a tacit admission that the brand equity of the flagship airline is no longer enough. By culling amenities and competing on price, Harteveldt says, “the major airlines have failed to make their brands stand for anything.” As a consequence, “brand loyalty is dead--54% of airline travelers do not view themselves as brand loyal.” Blank agrees: “The majors have commodity products,” he says. “JetBlue and Song have tried to elevate that. JetBlue is most akin to Target--reasonably priced while offering a level of funkiness you can’t find at K-Mart.”

Song is essentially the Delta Express affiliate reconstituted with putatively hip attitude, swanky snacks such as Altoids for purchase, and planes configured with seat-back satellite TV, streaming MP3 audio and interactive video games. Launched in April, Song flies primarily between the Northeast and cities such as West Palm Beach, Fla. (though it has added an L.A.-Orlando route), and caters to leisure travelers, a market segment taken for granted during the boom but now coveted with the collapse of business travel. Ted will start flying in February with four A320s--the same model as JetBlue’s--from United’s hub in Denver, and expand to 45 planes and service to L.A. and San Francisco from Las Vegas. United executives have said that cost savings wrung during its bankruptcy protection will allow it to operate Ted at a competitive cost structure, despite using United pilots.

The irony is that from a passenger-amenity perspective, these offshoots are arguably superior to the parent airline. There’s an extra inch of legroom between seats on Song aircraft than in coach on Delta, and Song charges much lower fares--which can only muddy passengers’ comprehension of what advantage the major carriers ultimately offer.

“People don’t understand why a 2,000-mile flight on Song, with seat-back TV and brand-name food you can buy, costs $300, but a 2,000-mile flight on Delta costs $2,000,” says Blank. “Song doesn’t compete with Delta from the same cities, but you’re getting a better experience.”

Inevitably, innovations from the spinoff airlines will migrate to the parent carriers. Delta has said it will use Song partly as a laboratory to try out new approaches that it may incorporate into its flagship brand. (The airline is also experimenting with enhanced one-class service aimed at business travelers under the Delta trademark, with planes once used for the Boston-New York-Washington shuttle.) Already, the majors are incorporating some of the marketing cues employed by low-cost boutique airlines while fast-tracking at-home check-in. The push is to move as much of the reservation and ticketing process as is practical to the Web or to check-in kiosks at airports. “By 2006, no one will have domestic paper tickets,” predicts Blank.

Still, despite the sometimes grotesque inconvenience of the past few years, flying has never been more ubiquitous or affordable. “This spring, air fares were approximately the same in real dollars as they were in 1988,” Headley says. Adjusted for inflation, he estimates, they should be 30% to 40% higher. “For the traveler, flying is pretty much of a bargain right now.” That hasn’t stopped anybody from complaining, but perhaps it should. “You cannot find a $100,000 mansion in Beverly Hills,” Harteveldt points out. “If you are paying $299 for an airline ticket, that’s a phenomenal value. Your expectations should be a seat on plane that carries you safely to and from your destination on time, not Cary Grant expectations.”

Surely the most promising development is that, for the first time in decades, the airlines are being goaded to innovate by new carriers who aren’t simply slashing prices but are redefining the flying experience and presenting passengers with options. Eliminating the preposterous food and passing on some of those savings in the form of better seating and entertainment is empowering to passengers for whom the airport security process is draining and humiliating. The truth is that flying ceased to be novel, let alone glamorous, years ago, a bit of nostalgia the airlines have been reluctant to surrender. JetBlue won people over precisely because it refused to pretend flying is fun. “In the ‘good old days’ when you flew you in your coat and tie, it was a big deal,” Van der Linden says. “Now it’s something people endure.”

It is telling that analysts now refer to airlines such as United, American and Delta as “legacy carriers” to differentiate them from new-generation start-ups such as JetBlue and Song. Likewise that JetBlue’s proposed new passenger facility at JFK would surround and metaphorically dwarf Saarinen’s classic TWA terminal, preeminent symbol of old-school airline dynasties.

“Legacies can be wonderful,” Harteveldt says. “But if you look at any legacy, there’s always a generation that screws up. If United, American or any of these guys who helped create the best air transport system in the world want to see the second 200th anniversary of the Wright brothers’ first flight, they’ve got a lot of work to do.”