When a discount airline comes to town, how can we lose?
That's the question raised by a lot of so-called travel experts lately. The answer, they suggest, is that we can't: A no-frills airline lowers fares when it encroaches on an established route of a major carrier. Air travelers should pack their bags and flock to the lower prices of these discount carriers.
Hold on a minute.
No doubt, discount carriers have been a boon to us with their resulting low fares. Isn't that what competition is all about? But the cheap seats aren't limited to the discount carriers. Whenever a low-cost airline moves into a hub city or competes one-on-one with a major carrier, the fares are matched.
For example, JetBlue Airways recently moved into the New York-Long Beach market with $99 one-way fares. In a move that would make market economist proud, American Airlines swiftly matched its fares.
While discussing this phenomenon with a friend of mine who lives in New York, he made a comment that should be heeded by all consumers. In his words, JetBlue has saved him thousands of dollars on his bimonthly trips to the West coast while maintaining the benefits of a full-line airline.
He described how he flies coast to coast for $99 one-way, by-passes long check-in lines, is rapidly processed through security and awaits his departing flight in a nice, quiet private lounge.
The secret my savvy friend knows is that you do not have to resign yourself to the hassles often fraught with the low frills carriers to get low fares. Instead, he opts for a first-class experience at coach prices. By maintaining his loyalty to American Airlines, he check-in at the first class/elite line, goes through security in the special American Airlines elite line, and waits for his flight in the Admirals Club.
He also earns miles that can be redeemed for flights any where in the world and, most importantly, he gets first-class upgrades.
Consumers who choose to maintain their loyalty to their established carriers still benefit with low fares but reap far more in value than what they would gain from a strategy of flying with discount carriers. Since full-service carriers match discount carrier's fares, established passengers of the larger airline have no real motivation to switch carriers.
By remaining with their previously established partners, they continue to build loyalty and earn elite status - enjoying greater global coverage, airport lounges, numerous mileage earning opportunities and the consequential low fares.
It makes perfect sense to reap the benefits of a discount carrier's low fares being matched by full-service carriers, while getting all the perks of a major carrier.
That's the real benefit when a low-fare airline comes to town.