Allegheny's Ascent

Allegheny Airlines sounds like the name of a puddle-hopping carrier that serves a mountain range in Pennsylvania. But to the heads of the nation's major trunk lines, Allegheny appears as a fire-breathing imperialist swallowing up lesser lines and challenging the giants for airspace. Though it is still classed as a regional carrier, Allegheny in the past five years has grown to become the sixth largest airline in the U.S. in passenger traffic. Its revenues have nearly quadrupled to $265 million, and profits have risen to $6,000,000 last year from a loss of $5,000,000 in 1967. The acquisition of the financially troubled Lake Central airlines in 1968 and Mohawk Airlines last year has given Allegheny a route system that embraces 70 cities from Memphis to Montreal.

This year, President Leslie ("Les") Barnes has added a few more cities to the list of destination points for Allegheny passengers: London, Paris, Rome, San Juan. In order to acquire them, Barnes had to tie up with yet another ailing carrier: Pan American, which has revenues nearly four times Allegheny's but has lost $150 million since 1968. The two lines are not actually merging--at least not yet--but they are offering one-week, single-ticket, group tours to Europe and the Caribbean for residents of 16 cities served by Allegheny. Customers fly from their home towns via Allegheny to a major "gateway," like New York or Boston, then board a Pan Am plane for the overseas hop. Sample price: $310 round-trip plus at least $70 for ground accommodations from Dayton to London for one week, v. as much as $520 economy air fare alone for Dayton-New York and New York-London tickets purchased separately. In addition, Pan Am clerks in London, Paris and Rome will act as Allegheny ticket agents for overseas passengers who want to go on to, say, Detroit after getting off a Pan Am plane at a port of entry.

Barnes first suggested the get-together last year, but Pan Am Chairman William Seawell may benefit most from the symbiosis. Pan Am, which has no significant intra-U.S. routes, has been in the market for a domestic partner for years, but merger talks with Eastern, United, TWA and Braniff have all fallen through. Now that Seawell's economies have begun to push Pan Am toward profitability, Allegheny's Barnes sees the two lines as made for each other. They stand to capture as much as $500 million a year in additional revenue by offering single-ticket service to passengers who live in cities served by Allegheny and fly to Europe or the Caribbean. Since the tie-up is so far much looser than a merger, Civil Aeronautics Board approval has not been required.

Barnes also has his eyes on other skies. Allegheny has applied to the CAB for routes to Los Angeles, Dallas-Fort Worth and Atlanta. If he can get routes to Atlanta from Detroit, Cleveland and Cincinnati, Barnes pledges to forgo Allegheny's annual federal subsidy. In return for flying into such small cities as Danville, Ill., and Johnstown, Pa., where traffic does not otherwise support commercial service, Allegheny collected $3,200,000 from the CAB last year.

Barnes' promise to give up the subsidy will be an incentive for the CAB to award Allegheny the Atlanta routes, but other airlines may oppose the move _ particularly Delta, which is based in Atlanta. If Barnes wins he pledges that on Jan. 1, 1975, his line will "request formal designation as a trunk carrier" --the first line to gain that distinction since Trans-Caribbean Airways was so designated in 1956.

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