Flying Gets a Lift

By SALLY B. DONNELLY

The good news for airlines over the holidays: passengers are back in force. The bad news: they actually want to get to their destination on time and want to take their bags with them. But over the past two weeks, thousands of flyers saw their flight canceled and their luggage lost as some airlines were on their worst behavior in years.

Flailing and financially failing US Airways, in bankruptcy for the second time in three years, canceled dozens of flights and then misplaced an estimated 10,000 bags. Northwest Airlines kept about 280 travelers on a diverted plane for more than 14 hours straight. But Comair, a subsidiary of Delta Air Lines based in Cincinnati, Ohio, may have won the Grinch Award: the airline canceled all 1,100 flights on Christmas Day because of what it said was a computer glitch.

But there are signs of hope. JetBlue Airways, the New York--based low-cost carrier (and one that virtually never cancels a flight) has lowered its already low fares: flights across the country are as low as $85. And Southwest Airlines is offering similar fares.

The biggest present for airline passengers, though, may be from Delta. Next week the nation's second largest carrier is expected to become the first of the so-called Big Six (American, Continental, Delta, Northwest, United and US Airways) to radically change its pricing policy nationwide, removing irritating ticketing rules like required Saturday-night stays, halving ticket-change fees to $50 from $100 and slashing fares on everything from first class to last-minute tickets.

Low-cost airlines like Southwest and JetBlue have long embraced such customer-friendly policies, but Delta is by far the biggest carrier to make such changes (America West Airlines started offering fairer fares in March 2002, followed by Alaska Airlines in February 2004). The airline hasn't published specific fares yet, but when it rolled out a test program in Cincinnati in August 2004, the highest ticket price to anywhere was $499 ($599 in first class). The delta.com website is also being revamped to ease the search for cheaper fares, as well as allowing passengers to get refunds and change tickets.

Other Big Six carriers will face pressure to follow, despite the industry's significant financial woes. "The other big airlines are sure to match Delta in order to compete," says analyst Vaughn Cordle of AirlineForecasts. "It's the beginning of the end of 'gotcha' pricing by the legacy carriers."

Delta is also making major changes to its operations. At its home base in Atlanta, the airline is overhauling its entire schedule, hoping to limit future flight disruptions and delays. The airline will add 81 more flights and seven new destinations from Atlanta, but will spread all the flights out more over the day. It's a late Christmas present, but a welcome one.