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Flying the Bankrupt Skies; Without a Pillow

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Well-known member
May 15, 2004
SAN FRANCISCO (MarketWatch) -- "Would you like anything to drink before we take off," the pleasant airline steward said on a United Airlines flight to New York last year.

"Sure, how about a champagne or a mimosa," I said, delighted at that moment with the upgrade gods, who tend to smile on me about as often as a lunar eclipse.

"Champagne? Are you kidding, we're bankrupt," the steward said jokingly, to the laughter of the rest of the business class cabin. "Here, have orange juice."

And so goes life these days on Bankrupt Air, the newest and soon to be largest airline system in the United States. With Delta Air Lines (DAL, Trade) and Northwest Airlines (NWAC, Trade) joining United (UALA.Q, Trade), US Airways Group (UAIR.Q, Trade), and a host of smaller airlines operating under protection from creditors, more than half of all the seats on flights in the United States will be on bankrupt airlines, according to Standard & Poor's.

Experts said Wednesday that passengers should not expect to see any changes on the airlines just because they've gone Chapter 11.

That's for sure. The long, slow slide into mediocrity for U.S. airlines began long before the bankruptcy attorneys sank their claws into the books. And it will continue long after the latest trend has expired and a new round of airline management takes a shot at reviving the troubled industry.

Forget champagne. The days when passengers regarded air travel as a luxury, dressing up for flights as glamorous attendants passed out captain's wings to children, have been over for 20 years. These days most flyers - even in business or first class - look more like they just came out of a locker room or baseball game than a dinner party. Sweat pants, tank tops, shorts and flip-flops are the norm, perfect attire to go with that warm Bud Light and $7 snack box.

Like the chicken and the egg question, it's hard to know whether deteriorating service caused passengers to start dressing down, or the other way around. But one thing's for sure, the idea that an airline has no money and that its flight crew and staff are facing uncertain futures has done nothing to deter people from packing planes.

And it won't now either.

Like the docile herd of cattle we've become in accepting almost any inconvenience in our lives these days, we pile on to bankrupt, cramped planes, jam our oversized luggage into the overhead bins, turn off our electronic gadgets and computers, and wait with dread for the person in front of us to recline.

That sense of despair over the state of the industry has long hung over its stocks. The Amex Airline Index (XAL) has never recovered from 9/11, even though most of the flying public has. It's trading now at about a third of the level it was at the beginning of 2001.

With no future as an investment, except maybe for the arbitragers, and little hope that conditions will improve on the planes soon, the U.S. flying public has accepted the fact that its airlines are bankrupt like just another pack of peanuts on its greasy tray.

Two years ago, at a conference for journalists in Dallas, I asked the heads of three of the major airlines at a big panel discussion what type of new services or amenities they had on their blackboards that might someday entice flyers to their brands.

Following the success of Jet Blue Airways (JBLU, Trade), with its leather seats and individual TV screens, this question seemed like a home run opportunity for anyone even remotely considering customer comfort as part of their business plan.

Yet to a man, each of the chief executives said that his main priority was improving his airline's on-time rates, and that if they could guarantee on-time performance, that would trump any need for conveniences such as TV, Internet access, food, pillows or plush seats. Imagine sinking so low that simply leaving and arriving on schedule is where the airlines have set their performance bars? I always thought that's what we paid for in the first place.

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