Top > Business > 2006 > November > 2006-11-22

Legacy Airlines Rise from Ashes

Like a phoenix from the flames legacy airlines, who many have considered lingering remainders from a bygone era, are returning from near extinction. Once dominant airline carrier such as American, Continental, Northwest and Delt have nearly been forced out of business in the first few years of the millennium by acts of terror, recession and new competitors. Now, what`s left of the recovering companies after drastic measures to minimize costs have been taken is beginning to show real signs of recovery.

Discount airlines such as AirTrans and JetBlue have the advantage of small fleets with few types of plains that substantially reduce costs on maintenance and training. This low cost one-size-fits-all strategy has its downsides some markets are too small for their planes while other mostly international destinations are too big for their planes. This is where the legacy airlines have their advantage. They can allow flights to more domestic and international destinations making them often the preferred if not only possibilities for many businesspeople.

It is difficult for discount airliners to increase income especially with rising oil prices as they are reluctant to raise their prices. While the major legacy airlines have raised ticket prices nearly in unison 22 times in the past 24 months and thus regained profitability after 5 years of colossal loss amounting to billions of dollars. The airlines that have for years downsized many positions have begun to rehire some of their ex-employees. Experts expect the industry to earn nearly $6 billion next year. If all goes well, this will be the first profitable year since 2001.