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
Frontier Airlines planes sit at Denver International Airport, June 2, 2008.   (AP Photo)
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(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.