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CNN Saturday Morning News

Interview With Tom Parsons

Aired August 03, 2002 - 09:18   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LARRY SMITH, CNN ANCHOR: There's a real dogfight going on between the discount airlines and the major carriers. It's a battle that affects you, the consumer. This week, Vanguard, a discount airline based in Kansas City became a casualty, grounding its fleet and filing for Chapter 11 bankruptcy protection.

Joining us now from Dallas to discuss the health of discount air carriers is the editor of BestFares.com, Tom Parsons.

Tom, good morning to you.

TOM PARSONS, EDITOR, BESTFARES.COM: Well, good morning.

SMITH: Was the bankruptcy situation for Vanguard a surprise?

PARSONS: I don't think so. I mean, the U.S. government denied them this -- what we call that emergency fund twice, so if the government believes they didn't have a somehow to survive, I don't think Vanguard could get the financing.

And this is a tough time for all the airlines. I mean, the majors have already lost this last quarter almost a billion, billion and a half dollars, and this is not a very good climate for any airline, really.

SMITH: Right. In fact, speaking of, let's start first with discount carriers in trouble. Are there any of them in trouble now? And are there any major carriers that maybe are facing some real serious difficulties?

PARSONS: Well, when you look at the discount airlines, they seem to be the ones making money or losing just a little. For example, Southwest Airlines, which is I call the king of cheap airfares, they made over $100 million this quarter, where the big airline, the biggest airline in the world, American, lost almost a half a billion dollars.

But you've also got airlines like America West, which lost only $8 million. You've got AirTran, which is based there in Atlanta, which is a -- it seems to be growing and almost breaking even or making a few bucks here and there, American Trans Air, and Spirit Airlines, those all seem to be doing fine.

They're still going to have difficulties for the fall season, but I think they're just as much to survive in this climate, probably even as better than some of the big airlines.

For example, United right now has lost about $370-some million, and yet they haven't up any money in the last eight quarters. U.S. Airways has filed with the U.S. government for a loan too. Hopefully they'll both get that money, and it'll keep them up in the air.

SMITH: Well, obviously the discount carriers doing something right. I Air Train jumped in with the Vanguard announcement, immediately said, Hey, we'll fly that Atlanta to Kansas City route. They had the flexibility to do that.

What is, though, the better way to go for travelers, a discount or one of the major airlines?

PARSONS: Well, you know, I always look at whoever gets me from point A to B the best. Because there's really little difference between the majors and the low-cost airlines today. I mean, used to be, well, you didn't get that much food. Well, I've been on many -- I've probably been on 60 planes, and I've been flying the name brand airlines, and I don't remember that much great food in the last few months.

So other than that, I think they're getting almost pretty equal. They're -- they fly the same kind of airplanes, in many cases, like AirTrans and Southwest Airlines, they have a very, very young fleet. They're not flying old airplanes, they're a very young fleet out there.

So I think when it all comes down to nickels and dimes to John Q. Public, we're right now -- I mean, the cheapest air fare in America, you know where that's at?

SMITH: I have no idea.

PARSONS: Nineteen bucks each way...

SMITH: Wow.

PARSONS: ... $38 round trip, Los Angeles, Ontario, Burbank, and Sant -- Orange County to Las Vegas, not for a couple weeks, but from September 3 through January 10. And that's with Southwest Airlines. Even the new JetBlue out of New York is going into Long Beach, and they're also offering a $38 round trip air fare from Long Beach into Las Vegas when they start service October 8.

So those are the low-cost airlines, like many airlines today are offering coast to coast air fares, like $198 round trip, those would not be there if it wasn't for airlines like the Southwest, America West, the Spirit (ph) Airlines, and the AirTrans of the world.

SMITH: I was just going to say, I've noticed many of the larger carriers having to reduce their rates just to compete in some of those markets.

Unfortunately we're out of time, but thanks so much for your insights today, Tom. PARSONS: Well, thank you.

SMITH: OK. Tom Parsons joining us from a discount -- BestFares.com.

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