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Aging Airlines Can't Catch Up to Younger Rivals

Recent changes haven't helped 'legacy' carriers

By Sarah Quinn,  Newser Staff

Posted Apr 7, 2009 8:52 AM CDT

(Newser) – Despite many rounds of cost-cutting, so-called legacy airlines—United, Delta, US Airways—still face costs 35% higher than low-fare carriers like JetBlue and Southwest, the Wall Street Journal reports. The younger outfits have maintained a “cost gap” analysts thought their older peers could close over time. For one thing, having more top-scale workers keeps aging carriers at a disadvantage. “Even if the scale is the same, the cockpit costs are different,” says US Air’s CEO.

Legacy airlines have survived on business travel and expensive international routes, but recession puts a damper on both. Another factor is fuel prices. “When oil went up, we lost a lot of our advantage,” says JetBlue’s CEO. “As it came down, the lower-cost guys regained our advantage.” And growing carriers are naturally leaner: They have new, reliable planes and less-senior employees.

Frontier Airlines planes sit at Denver International Airport, June 2, 2008.
Frontier Airlines planes sit at Denver International Airport, June 2, 2008.   (AP Photo)
In this May 16, 2008 file photo, Southwest Airlines jets are seen parked at their gates at Baltimore Washington International Airport in Baltimore, Md.
In this May 16, 2008 file photo, Southwest Airlines jets are seen parked at their gates at Baltimore Washington International Airport in Baltimore, Md.   (AP Photo/Charles Dharapak, file)
Delta Air Lines jets are parked at John F. Kennedy International Airport in New York on Sept. 8, 2008.
Delta Air Lines jets are parked at John F. Kennedy International Airport in New York on Sept. 8, 2008.   (AP Photo)
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