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Terminal Patient?

After Years Of Rising Costs, Declining Revenue, And Stiff Competition From Low-Cost Carriers, Major Airlines Serving Puerto Rico Are Struggling To Survive. What Does The Future Hold For The Beleaguered Industry?


June 5, 2003
Copyright © 2003 CARIBBEAN BUSINESS. All Rights Reserved.

Is there light at the end of the runway? Following a national trend, the Puerto Rico market will soon see more low-cost carriers and expanded low-cost service from major airlines.

Major airlines that serve Luis Muñoz Marin (LMM) International Airport have been in the worst financial nosedive in aviation history. Some could be gone by next year, or they could be in better shape--even if by resorting to bankruptcy.

It’s been two years since the industry’s profits began their downward spiral. Industry experts now predict that the top 10 carriers on the U.S. mainland, six of which serve Puerto Rico, will lose approximately $6.5 billion in 2003.

"Consumers will see some airlines disappear, though I don’t think that’s going to happen soon," Ray Neidl, airline analyst at Blaylock & Partners, told CARIBBEAN BUSINESS.

"Consumers will still be able to get bargains. Once the capacity is down a bit, however, the airlines will have more power over pricing."

With revenue depressed, airlines have been forced to cut costs, usually in the labor department, in order to make a profit or to break even. Labor is the industry’s single largest expense, accounting for more than 40% of the total operating cost; most airline workers belong to one of a dozen major labor unions. Fuel represents about 15% and airline equipment (excluding maintenance) about 10% of the cost.

"Part of the reason major carriers are losing money is [the high cost of] labor, but that isn’t the only factor," Neidl said. "They let other costs get out of hand, and of course a big part of the problem was beyond their control, such as a slow economy and 9/11."

Despite the airlines’ cries of alarm, the industry isn’t about to go belly up. Discount airlines such as Southwest, the only carrier that maintained its capacity and employee count after 9/11, and JetBlue, which started serving Puerto Rico last year, reported profits for first-quarter 2003. Major airlines, on the other hand, have attacked bloated costs with a ferocity never seen before.

Winners among losers

The days of charging thousands of dollars for a nonstop domestic flight are over; there are too many low-fare carriers that provide good service on new aircraft.

"The aviation industry is constantly changing and low-cost carriers will continue to grab market share, but there will still be a need for network carriers, though perhaps not as many as we have now," Neidl said. "What the major airlines need to do is get their cost structure down to meet what the market is willing to pay for their extra service."

Low-fare carriers are driving down ticket prices on routes from which major carriers derive approximately 55% of domestic revenue. Internet booking has also made it easier for passengers to compare prices. Although a successful start-up carrier needs good capitalization, a low cost structure, and a niche market, it all boils down to travelers believing they are getting a good value for their dollar.

"We consistently provide a better value for travelers, and they appreciate that and keep coming back," said Jacob Schorr, CEO of Spirit Airlines. "I think passengers also remember that the majors have charged them outrageous costs."

Spirit Airlines--which has two daily non-stop flights out of San Juan to Orlando and Fort Lauderdale and one-stop or connecting service to Atlantic City, Chicago, Detroit, and New York--is one of the few airlines that reported an operating profit in first-quarter (1Q) 2003. Revenue gained 27% compared with the year-ago quarter, following a 31% increase in capacity (measured in available seat miles). In other words, revenue grew in proportion to the capacity expansion.

Overcapacity, which means having more planes in the fleet than are needed to meet passenger demand, is also driving down fares, at least for major carriers. Although the majors have grounded hundreds of planes since 9/11--capacity is down 13% industrywide--supply and demand are still out of kilter. Neidl thinks another 15% to 25% of capacity must be cut for the airlines to regain their footing.

"Fewer seats would increase yield so the big airlines could make money," said David Neeleman, CEO of JetBlue, which has four daily flights from San Juan to New York’s John F. Kennedy Airport and plans to add a fifth on June 12. "Seats are being filled, however. For example, load-factor numbers haven’t changed significantly, but they [the seats] are selling for fares so low that the majors can’t make money."

JetBlue had operating revenue of $217.1 million in 1Q 2003, 62.7% higher than the $133.4 million reported in 1Q 2002. Operating income in 1Q 2003 was $34.5 million, resulting in a 15.9% operating margin. Net income in 1Q 2003 was $17.4 million, or 25 cents per diluted share, compared with $13 million, or 23 cents per diluted share. Revenue passenger miles increased 82.1% to 2.4 billion and available seat miles increased 80.7% to 2.9 billion.

Everyone agrees overcapacity is a big problem, but experts believe major airlines fear that if they ground more planes, a rival will snatch market share.

"Traffic is already pretty reduced and the airlines are holding traffic steady through discounting," Neidl said. "Expect to see a slight pickup in traffic as the economy starts to rebound. For the big network carriers, it won’t be big growth; 2% is the best they can hope for. The real growth will be in the low-cost, point-to-point carriers, which are growing anywhere from 20% to 50% a year, and in the regional airlines, which will probably be growing at the same rate."

Can these low-cost carriers adapt their business model to serve more markets? "Absolutely," said Spirit Airlines’ Schorr. "We have grown substantially over the past few years. We entered the Puerto Rico market in November 2001, when no one was growing, and we now serve six cities from San Juan. In 2002, we opened two more markets, Denver and Las Vegas, and Spirit will continue to look at cities with large populations and where our value pricing can succeed."

JetBlue’s Neeleman said, "We can serve more markets, but it’s all about controlled growth. We take delivery of a new plane every three or four weeks and we’ve already announced two new cities, Atlanta and San Diego, but our focus this year will be on connecting the dots between the cities we already serve and expanding the frequency on our established routes."

JetBlue added a daily flight between John F. Kennedy Airport and San Juan on May 22 and another will be added on June 12. It currently has three daily flights on that route.

"ATA is looking at markets where the airline can become a low-cost alternative or where major carriers have reduced service," said Stan Hula, vice president of planning for ATA Airlines, the fifth-largest airline in the U.S. "Our main hub at Chicago-Midway is getting additional gates, which will allow more flights."

ATA Airlines reported first-quarter 2003 operating profit of $1.5 million and a loss to common shareholders of $11.4 million, or 97 cents per share. This contrasts with an operating profit of $10.1 million and profit to common shareholders of $1.5 million, or 12 cents per share, in 1Q 2002. ATA ended 1Q 2003 with $160.6 million in unrestricted cash.

Top-operating revenue for ATA during 1Q 2003 was $373.6 million, 13% higher than in 1Q 2002. Scheduled-service revenue increased 17.5% to $244.8 million. Total charter-service revenue increased 16% to $112.3 million, and total operating expenses increased 16.1% to $372.1 million.

What will the majors do?

The airline industry has been nearly crippled by the burst of the technology and telecommunications bubbles, 9/11, the war in Iraq, and the outbreak of severe acute respiratory syndrome (SARS). However, many experts say the airlines deserve plenty of the blame for their agony.

They note that major airlines lost control of costs in the 1990s and passed the burden by raising business-class fares 79% in five years. That strategy worked until the recession and terrorism put the brakes on business spending and more low-cost rivals took to the skies.

"Major carriers have been arrogant toward the customer, charging high fares for last-minute travel and for business travel," said Schorr of Spirit Airlines. "This arrogance and the decline in demand as a result of 9/11, the economy, the war in Iraq, and SARS have led to the current plight of the industry."

There is, however, light at the end of the runway for major airlines. After years of rising costs and dwindling profits, aggressive cost-cutting measures have borne fruit. US Airways, United Airlines, and American Airlines have obtained huge cost reductions from labor unions, lenders, aircraft lessors, and vendors.

US Airways emerged from bankruptcy with nearly 20% lower costs. Union leaders at United agreed to new labor contracts so the carrier could come out of bankruptcy. American managed to avoid filing for Chapter 11 bankruptcy protection by signing and immediately implementing new labor contracts which will allow the company to reduce labor costs by $1.6 billion, or 23% a year, as part of a $4 billion restructuring plan.

American’s deal to temporarily avoid bankruptcy came at a high price--CEO Don Carty had to resign, and at least 7,000 more employees will lose their jobs. Several weeks ago, American Airlines indicated in a securities filing that it still might have to file for bankruptcy protection despite having managed to cut annual costs by nearly $4 billion.

"Although lowering costs has been our focus in recent months, returning the airline to profitability is going to require a much broader plan," said Gerard Arpey, CEO of American Airlines. "The leadership team and I have been working hard to crystallize our strategic vision into a crisp, easy-to-understand plan to provide a framework for decisions we make going forward."

The new strategy, dubbed the American Turnaround Plan, is summed up in four directives: lower costs to compete, fly smart to give customers what they value, pull together to win together, and build a financial foundation for the future.

American, United, and US Airways together represent about 45% of the industry in the U.S., including Puerto Rico. Experts believe rival major airlines will be compelled to duplicate those savings, even if it means they may have to file for Chapter 11.

Top industry executives say this predicament gives full-service airlines an opportunity to change their cost structures and narrow the gap between what they and their low-cost rivals spend to fly a passenger one mile. Right now, major carriers spend about 50% more than low-fare carriers such as Southwest to fly a passenger one mile. Even if the majors fill 85% of their seats, they can’t turn a profit at today’s average prices.

Some carriers are creating new business models to compete with low-cost carriers, bridging the divide between affordable fares and premium performance. Price competition is fundamental in the leisure travel market; fare differentials of just a few dollars can persuade leisure travelers to select one airline over another.

Business fares, on the other hand, are rarely discounted. Nevertheless, companies, too, have become more cost-conscious.

"Basically, the higher-cost carriers aren’t changing their main business model, which is the hub-and-spoke," Neidl said. "Travelers today aren’t willing to pay as much for premium seats via the hub-and-spoke system, so prices had to be lowered." The hub-and-spoke system allows broad geographic coverage and lowers costs for the airlines by connecting traffic between two points through a hub to avoid having to provide point-to-point service between smaller airports.

Despite the flurry of activity, the big question remains: Can American, United, Delta, Continental, and US Airways generate enough savings to survive?

United Airlines and Delta Air Lines believe an in-house, low-cost carrier that is fully integrated into a global hub-and-spoke network is crucial. In April, Delta launched Song, its newest low-fare service. Song, which flew its maiden voyage from New York to West Palm Beach, intends to have 144 daily flights by this fall.

The airline plans to use Boeing 757 planes with 199 all-coach seats; the planes will be introduced at an average rate of one per week for 36 weeks. Song will enter the Caribbean market in July, when it begins offering one daily roundtrip from Orlando to San Juan.

United has been meeting frequently with its labor unions to build a company that can sustain both its profitability and its work force. Part of the plan is to create a low-cost airline subsidiary in the fourth quarter, to which about 30% of United’s domestic capacity would eventually be shifted.

Although the lower fares are undoubtedly good for consumers, analysts say the cutthroat competition in the segment could spell more trouble for struggling United. Henry Harteveldt, principal airline analyst at Forrester Research in San Francisco, says United is taking the wrong route; with so many airlines today using the low-cost model, it will be hard for United to distinguish its product.

"This is absolutely the wrong direction for United to take," Harteveldt said. "United Airlines’ customers are into showing off the finer things in their lives. They work hard; they’re well-educated and successful. They fly United because they want to receive a tangibly better experience than they’d get with Southwest."

Can full-service airlines win if they go head-to-head with low-cost carriers? Neidl says no. "They will never be able to cost-structure down that low because of the complex mix of aircraft that they need to operate the more expensive hub-and-spoke system," he said. "The only way they can really compete is if they start a low-cost subsidiary like United and Delta are trying to do. Even then, it’s questionable [whether it’s possible to] run a low-cost airline within a higher-cost airline."

ATA’s Hula, however, believes full-service airlines can compete with low-cost carriers "if they are able to reduce their overall costs, simplify their fleet, and substantially lower their cost per seat mile. They will need to make many changes to compete with the efficient carriers," he said.

US Airways has concentrated on reining in costs rather than creating a low-cost carrier. "We want to get our own costs in line and to cater to our customer base on the U.S. East Coast," said David Johnson, commercial director for US Airways in Latin America and the Caribbean. "For example, our goal in the Caribbean, a key leisure destination for East Coast customers, focuses more on access than on market share."

Continental, meanwhile, is bucking the trend. "Continental isn’t attempting to reinvent the wheel," said Pete Garcia, the airline’s vice president for Latin America and the Caribbean. "Some major airlines may be pursuing the airline-within-an-airline concept, but we aren’t. We tried that and didn’t like the results."

Garcia said Continental already has an advantage over low-cost carriers--it has premium customers who are paying more for additional services such as wine, cocktails, and movies on the same airplane as low-fare customers. Continental is still losing money, though, and its operating costs, although lower than American’s, are high relative to the low-fare players. Continental will still have to make changes to survive.

"The low-cost airlines are mainly targeting price-conscious travelers," Garcia said. "So we reach a broader market and we can command a premium from travelers who want more than they can get from a JetBlue or a Southwest."

American Airlines, meanwhile, is increasing the number of coach-class seats in markets where price is more important than leg room. The "More Room Throughout Coach" campaign introduced in 2000 will be revamped by December.

The change will affect the Boeing 757s and Airbus A300s, which together represent one-quarter of the carrier’s entire fleet. The 757s will get 12 more coach seats each and the A300s will get 16 each. The 757s serve 30% and the A300s 50% of American Airlines’ Caribbean market.

"I want to be clear that we aren’t creating an airline within an airline, because we don’t believe a successful formula for that concept exists," said Arpey. "We’re simply returning to standard seating in those markets where customers tell us they choose a carrier predominantly based on low seat prices."

Neidl said there are passengers still willing to pay for premium seats (first and business classes), but their numbers are dwindling. "The carriers used to be able to sell as much as 80% of their premium-seating capacity. Now they’d be lucky if they maintain a 30% load factor on their premium seats," he said.

All in the industry are keeping an eye on United Airlines. Jim Corridore, Standard & Poor’s transportation equity analyst, says that if United were forced to liquidate, overcapacity would be reduced sufficiently to allow the remaining carriers to raise fares and, perhaps, profits.

If, however, United succeeds in obtaining the concessions it seeks from its labor unions, suppliers, lessors, and debt holders, it could emerge from bankruptcy much healthier. This would exert pressure on competing airlines to make significant cost cuts to match a leaner United.

Changes in store for air travelers

The airline industry knows it must put customers first if it hopes to survive. Many companies have already launched new products and services that demand a premium.

United Airlines, Spirit Airlines, and US Airways are testing selling food onboard. "Rather than purchasing food at the airport, customers can purchase restaurant-quality meals from the comfort of their seats," said Bill Dove, director of Worldwide Catering at United. Depending on the time of the flight, United travelers can buy breakfast for $7 or lunch for $10.

Spirit is trying out two varieties of brand-name snack packs at $4 each. "At Spirit, we strive to make the entire travel experience convenient and enjoyable, from offering enhanced website functionality to onboard amenities," said Tom Anderson, senior vice president & chief marketing officer at Spirit Airlines. "The snack-pack program is an extension of our philosophy to deliver a quality product at a reasonable price."

In 2002, Gordon Bethune, CEO of Continental Airlines, told CARIBBEAN BUSINESS the airline was considering offering assigned seats, frequent-flier miles, meals, pop-up TV screens, and movies to customers willing to pay higher fares.

"We need to be able to offer a product that people want to purchase, but we also need to recognize that the marketplace has changed and a lot of people don’t value some of the things we offer because they are just looking to buy cheap tickets," Bethune said in an interview last year (CB Sept. 26, 2002). "If you get on the Internet and buy the lowest fare, as so many people do today, you don’t care about assigned seats, or if the flight offers a meal; you just want to buy an inexpensive ticket."

Pete Garcia, Continental Airlines vice president for Latin America and the Caribbean, said his company is emphasizing service. "One of the main issues facing us is the need to create personalized, friendly service when we serve more than a hundred thousand customers per day," he said. "In an ideal world each customer would get highly customized and personal service from the beginning of the trip to the end, but that costs money. What we try to do is create programs, services, and systems that let customers know what to expect and allow us to deliver that consistently."

Another customer enhancement is online check-in for those with e-tickets traveling in the U.S. Travelers without luggage can bypass the check-in line at the airport by obtaining a boarding pass at their home or office. Of course, they still must pass through security at the airport.

Continental Airlines introduced Continental Currency, which is redeemable onboard for beer, wine, cocktails, and headsets. The currency can be purchased before departure using a credit card, which is handy for those who find themselves short on cash.

Continental Airlines and Delta Air Lines have joined to give customers whose itinerary includes travel on both carriers a single e-ticket. Some airlines are also offering curbside check-in and more leg room in coach class.

"Every airline is competing for the same customer," said Jacob Schorr, CEO of Spirit Airlines. "I think customers will win as airlines all try to. . .keep fares low and improve the travel experience."

Regional service and new aircraft are crucial to major airlines

Regional airlines and major air carriers have a symbiotic relationship. The majors can’t rely solely on their own, more expensive aircraft and crew to shuttle hundreds of thousands of passengers each day.

Regional airlines, in turn, depend on major carriers for up to 60% of their passengers. The major airlines also provide credibility, worldwide marketing prowess, and a designator code in the computer reservations system. To be successful together, regional and major airlines must operate with a single system for booking and boarding.

With more regional airlines being controlled through equity ownership or code-sharing agreements with the majors, the number of carriers serving these smaller markets is expected to contract. According to the Regional Airline Association, a trade organization based in Washington, there were approximately 94 regional airlines in 2001, but that number will shrink to 50 by 2010.

American Airlines owns the largest regional carrier, American Eagle (AE), which is the holding company for Executive Air. Executive Air operates as AE out of the Miami and San Juan hubs, providing service to destinations throughout Florida, the Caribbean, and the Bahamas.

Delta Air Lines is perhaps the most active player in the U.S. regional market. In early 2000, Delta acquired Comair, whose entire fleet consists of regional jets, and Atlantic Southeast Airlines.

The regional airlines have typically employed only turboprop (an engine that uses propellers for thrust) planes. Recently, however, the regionals have been phasing out these small, noisy aircraft in favor of larger jets.

The importance of regional jets in altering the air travel business can’t be overstated. Because of their relatively low purchase and operating costs, regional jets have turned short-haul markets, previously abandoned by major airlines, into viable destinations.

According to Bombardier, a leading manufacturer of business jets, regional aircraft, rail transportation equipment, and motorized recreational products, 44% of the regional jets produced go to supplement existing regional air service, 33% to create new nonstop regional service, 15% to replace mainline jet service, and 8% to replace turboprop service.

Recognizing the value of regional carriers, the major airlines have taken steps to increase their control over these companies. Many have acquired partial or total equity in carriers with a strong regional presence.

That’s hasn’t been the case for American Eagle in San Juan, however, which still serves the Caribbean primarily with ATR turboprop planes because its market dominance makes upgrading the fleet unnecessary. The former Trans World Airlines (TWA) had plans to launch a regional air carrier from San Juan four years ago. It was expected then that the competition would force AE to move the turboprop planes to other markets, as the company did when it cut unprofitable jet service from San Juan to a half-dozen Caribbean islands. Instead, however, American Airlines purchased TWA.

Labor is another vital component to regional market growth. All pilot contracts have scope clauses, which establish the definition (scope) of the pilots’ jobs and who may perform those jobs. Scope clauses severely restrict the participation of some airlines in the regional jet market.

American Eagle, for instance, can fly regional jets, but its scope clause limits such aircraft to 45 seats or fewer. "American Airlines is into the regional jet business in a big way, but it wants to get rid of the scope clause, which limits the number of regional jets it can use," said industry analyst Ray Neidl.

The only major airline whose labor contracts carry no restrictions on aircraft use is Continental Airlines, which flies regional jets through its wholly owned Continental Express affiliate. "Continental Express is a core piece of our system because it helps us tap into the smaller cities, and those passengers feed into our hubs to get on the big jets to the major cities," said Pete Garcia, Continental Airlines vice president for Latin America and the Caribbean.

US Airways, meanwhile, made an agreement under its business reorganization plan to pay $4.3 billion for at least 170 Canadair and Embraer regional jets from Bombardier and Embraer of Brazil. The first planes are scheduled for delivery in October.

"Service to smaller communities, whether on larger mainline jets or on 50- or 70-seat regional jets, is a core element of our East Coast-focused route network," said David Johnson, US Airways commercial director for the Caribbean and Latin America.

LMM airport will be hit by layoffs at American Airlines; carrier to replace most turboprop aircraft with regional jets, but American Eagle’s ATR 42 planes will continue serving Caribbean

American Airlines has begun cutting jobs under recent agreements with all its unions to save $1.8 billion annually in labor costs and keep it from bankruptcy.

All domestic American Airlines employees have taken pay cuts, and the company expects more than 7,000 jobs to be eliminated. This estimate includes 2,200 pilots, 1,300 mechanics and related workers, 1,200 fleet service clerks, and 2,400 flight attendants.

Peter Dolara, American Airlines senior vice president for the Miami, Caribbean, and Latin American markets, told CARIBBEAN BUSINESS that San Juan’s Luis Muñoz Marin (LMM) International Airport would be affected by the layoffs, though not to the extent that other destinations would. American Airlines’ chief hub cities include Dallas / Fort Worth, Miami, San Jose (Calif.), Chicago (O’Hare), and San Juan.

"American Airlines is trying to figure out how we can modify San Juan operations to minimize the impact of the furloughs," said Dolara, who was responsible for developing the carrier’s San Juan hub and making improvements to other Caribbean airports. "The staff in Puerto Rico is well-trained, and we hate to lose valuable people. That’s why we’re trying to reduce the layoffs there."

The number of American Airlines employees in San Juan to be furloughed hasn’t yet been determined, but the layoffs will begin on June 14.

American Airlines is a dominant presence in San Juan, with 58% of all flights and 69% of all seats. However, a weak economy, 9/11, and the war in Iraq have caused business travel (the bread-and-butter market of the airline industry) to drop considerably and the carrier to slightly reduce its frequency in comparison to 2000.

Immediately after 9/11, American Airlines reduced its schedule in San Juan to 36 flights per day. Today, the carrier offers 44 daily flights, and is expected to boost that number to 53 by July 2.

"We are very aggressive in Puerto Rico and the Caribbean because American Airlines believes San Juan as a travel and tourism destination has improved in the past six years," Dolara said.

He noted the airline has also had to contend with the trend toward booking flights closer to the travel date and with increasing competition from low-fare carriers. "People are booking their flights late," Dolara said. "Before, people would book their flights 90 days to 120 days in advance; now it’s just 30-day to 60-day windows."

To satisfy the demand for competitive fares, American Airlines is investing $10 million to add seats to planes in markets where price is more important than leg room. This change, to be completed by December, will affect the Boeing 757s and Airbus A300s, which together represent one-quarter of the carrier’s entire fleet. The 757s serve 30% of American Airlines’ Caribbean market and the A300s serve 50%.

"We’re not putting seats back on the planes based on destination; we’re doing it based on the aircraft," Dolara said. "This change is specifically targeted to the high-density markets where we have competition from low-cost, low-fare airlines, such as the New York-San Juan route.

"If you want to be competitive, you can’t remove seats from a route where your competitor has plenty of seats," Dolara continued. "We want to compete in product, price, and service."

American Airlines CEO Gerard Arpey said recently during AMR Corp.’s annual shareholders meeting in Fort Worth, Texas, that the carrier is also proposing to replace turboprop airplanes in some markets with regional jets. In San Juan, however, American Airlines regional carrier American Eagle will continue to use ATR 42 turboprop planes, which seat 46 passengers, to serve destinations throughout Florida, the Caribbean, and the Bahamas.

"The ATR aircraft is perfect for Puerto Rico because we can’t justify investing $20 million on a regional jet to fly to St. Thomas, St. Croix, or St. Maarten when these destinations are so close to San Juan," Dolara said. "American Airlines will fly a Boeing 737 that seats 130 passengers to Puerto Plata, Santiago, and Santo Domingo because that plane is already operating out of a U.S. city and making a stopover in San Juan. Nearly 30% of that aircraft’s seats have already been sold in the U.S."

Another reason San Juan and the Caribbean won’t get regional jets is these planes have less cargo space. "The biggest problem we have for Caribbean travelers is the lack of cargo space," Dolara said. "Regional jets have enough space for just one piece of luggage per passenger, whereas the ATR 42 has more cargo and seat capacity.

"The regional jets are commuter flights that work for the American market, but not for the Caribbean," Dolara continued. "They couldn’t possibly work in Santo Domingo, Puerto Plata, Santiago, Haiti, or Jamaica, where each person carries three to six pieces of luggage."

Distribution of Weekly Outbound Nonstop Flights from LMM Airport

December 2002

Caribbean Region 564

U.S. Mainland 474

U.S. Virgin Islands 318

Intraisland** 47

Central America 12


Includes Buenos Aires (1), Toronto (1), Caracas (3), and Madrid (3).<BR>**Includes Mayaguez (19) and Ponce (28).

Source: Official Airline Guide

Unrestricted One-Way Economy Fares Between LMM Airport & Selected U.S. Destinations

Destination: Fares*

Chicago: $820-$970

Fort Lauderdale / Miami: $320-$480

New York / Newark: $630-$760

Orlando: $330-$520

Washington: $660-$800

*Data represents base fares only (taxes, fees, surcharges, and airport charges not included). Data is based on published fares for travel on May 28, 2003. Fares have been reduced to the nearest $10.

Source: Individual airline reservation call centers

Chief Hub Cities of the Major Airlines in 2002


Hub City: Market Share

American Airlines

Dallas / Fort Worth: 61.9%

Miami: 55.1%

San Juan: 44.5%

San Jose: 32.0%

Chicago (O’Hare): 31.6%

Continental Airlines

Houston: 73.7%

Newark: 56.0%

Cleveland: 37.7%

Delta Air Lines

Atlanta: 72.5%

Cincinnati: 64.9%

Salt Lake City: 64.8%

Orlando: 26.3%

Fort Lauderdale: 25.1%

New York (LaGuardia): 24.5%

Northwest Airlines

Minneapolis / St. Paul: 72.4%

Detroit: 69.6%

Memphis: 63.9%

Honolulu: 8.7%

United Airlines

Charlotte: 82.9%

Pittsburgh: 75.6%

Philadelphia: 61.8%

Washington (Reagan): 33.6%

Baltimore: 24.6%

US Airways

Denver 60.7%

San Francisco 49.9%

Washington (Dulles) 47.9%

Chicago (O’Hare) 44.1%

Source: Aviation Daily

Weekly Outbound Nonstop Flights from LMM Airport

Destination: No. of Flights

Anguilla: 21

Antigua: 21

Aruba: 14

Atlanta: 32

Baltimore: 8

Barbados: 14

Beef Island: 156

Bonaire: 7

Boston: 21

Buenos Aires: 1

Canouan Island: 3

Caracas: 3

Charlotte: 16

Chicago (Midway): 5

Chicago (O’Hare): 5

Cleveland: 2

Curacao: 4

Dallas / Fort Worth: 23

Detroit: 8

Dominica: 7

Fort Lauderdale / Hollywood: 35

Grenada: 11

Hartford: 9

Houston: 7

La Romana: 7

Madrid: 3

Mayaguez: 19

Memphis: 2

Miami: 69

Newark: 43

New York (JFK): 65

Orlando (International): 35

Orlando (Sanford): 5

Panama City: 12

Philadelphia: 35

Pittsburgh: 2

Pointe-a-Pitre: 7

Ponce: 28

Port of Spain: 7

Puerto Plata: 7

Punta Cana: 23

Santiago (DO): 14

Santo Domingo (Herrera): 14

Santo Domingo (Las Americas): 65

St. Croix: 114

St. Kitts: 28

St. Louis: 7

St. Lucia: 35

St. Maarten: 49

St. Thomas: 204

Tampa: 9

Toronto: 1

Virgin Gorda: 50

Washington (Dulles): 10

Source: Official Airline Guide, December 2002

This Caribbean Business article appears courtesy of Casiano Communications.
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