NEWS: Travellers Fickle with Low Cost Carriers

The Wichita Business Journal recently published a little article on how AirTran is fairing at Wichita's Mid-Continent Airport. Three years ago AirTran added scheduled service to the midwest airport causing air fares to plummet and traffic to increase. AirTran's success in Wichita did not go unnoticed and soon the competition arrived in the form of legacy carriers looking to take back marketshare. So over three years the airport has seen a 12% increase in traffic yet AirTran's traffic has decreased 10% for the same period. Why is this struggle in the heartland important in the big scheme of things? Because it illustrates, in a microcosm, a scenario that plays out time and time again for low cost carriers in markets throughout the country.

Low costs carriers make their name by marching into a market that is being overcharged and/or underserved by a legacy carrier (or two). They are air fare super heroes and everyone loves them despite the lack of frequent flier programs, bonus programs or any of that other legacy carrier hoopla because the fare are great. But then an ugly thing happens. The legacy carriers begin matching fares and pumping up incentive programs to regain their stolen popularity. So does the traveling public stay true to their low fare saviors? Sadly the answer is no, not usually. The fickle public tends to drift back to the big names with the loyalty programs. Often the low fare carrier ends up leaving the market, fares go up and the whole vicious cycle starts again. Ain't this business grand?