One hundred years after the first powered flight, there are still things wrong in the Wright business. Last week, ATA Holdings (NASDAQ:ATAH) announced its "Vow to Save More in 2004" discount fares. With rival air carriers left with little choice but to follow, this may sound like good news to you, but it is bad news for the industry.
The major carriers might just translate the ATA promise to "Vow to Bleed More in 2004." After all, airlines just weren't built for flying folks around for as little as $63 each way as ATA will be doing over the next few months.
Even the discounters can't be happy. ATA's low-cost, multitasking workforce accounted for just 29% of the carrier's operating expenses last year. Pioneer Southwest (NYSE:LUV), on the other hand, has a 39% hurdle to clear.
And for all the love given JetBlue (NASDAQ:JBLU) during its brief existence, no one is immune to a pricing war. Resistance may be futile. Two weeks ago, American Airlines parent AMR (NYSE:AMR) announced a fuel surcharge increase, only to reverse itself four days later after its competitors failed to follow suit.
While major carriers such as AMR and Continental (NYSE:CAL) have seen their shares more than triple off their March lows, the industry's discounting ways may nip those ascending patterns before the sector can really take flight.
So, go ahead and take advantage of the great winter deals out there. Why not? Smile as you stare into the remnants of your salty tinfoil-wrapped snack. Yes, you're flying for peanuts. However, this is a sector that wasn't crafted to work for peanuts.
It's not just ATA putting out some great fares in 2004. Want to learn about more cost-cutting deals? Care to share some discounting travel tips? All this and more -- in the Cheap Air Fares discussion board. Only on Fool.com.
