AIRTRAN Airline holds its own in market

AirTran has been a success in the air as well as in marketing.
MILWAUKEE JOURNAL SENTINEL
Seven years ago today, the name ValuJet became forever etched in air travelers' minds when Flight 592 plunged into the Florida Everglades, killing all 110 people aboard.
Until that crash, ValuJet had been a success story. Its cheap fares and savvy marketing were the envy of airlines many times its size.
ValuJet began service in June 1993, offering inexpensive flights from Atlanta to Tampa, Fla. It acquired a large fleet of older Douglas DC9-32 jets and quickly expanded its network to reach 31 airports, including Chicago and New York.
After the crash, travelers deserted ValuJet as critics raised questions about the safety of such small, start-up airlines.
"ValuJet became the ugly example of what people were saying about low-fare airlines," said Peter Krivkovich, president of Cramer-Krasselt, a Milwaukee advertising agency hired in 1997 to win customers back, shortly after ValuJet announced plans to merge with Orlando, Fla.-based AirTran Airlines.
ValuJet adopted the AirTran name, and with the help of Cramer-Krasselt embarked on an ambitious effort to rebuild the business.
X-fares, honesty
As the sequel to ValuJet, AirTran has written its success story through low fares, an aggressive expansion and marketing strategies such as X-fares, an old ValuJet promotion that allows customers between 18 and 22 years old to fly standby for $52 each way.
Such efforts help build customer loyalty. As young customers mature and make more decisions about business travel, they've already developed an airline preference, said Tad Hutcheson, AirTran marketing director who developed X-Fares.
Some of the AirTran story has been shaped by Cramer-Krasselt. That work included an initial ad campaign that included a strong reference to the tainted ValuJet name.
"It would have been disastrous if we had tried to cover up the connection and then had it leak out that AirTran was flying ValuJet planes," Krivkovich said. "So we were completely up-front about everything, knowing it was the only way to clear the table and get the story behind us."
This summer, AirTran will retire the last of the old ValuJet planes as the transition to a fleet of Boeing 717s is completed.
Showing profit
AirTran is one of a handful of U.S. airlines that have turned a profit since the Sept. 11, 2001, terrorist attacks. As bigger airlines have retrenched, AirTran has added seven cities to its route system since 2001. The airline's annual revenue has increased steadily every year, from $439 million in 1998 to $733 million in 2002.
"This is a fiercely competitive company that is firing on all cylinders," said Stuart Klaskin, airline analyst with Klaskin Kushner & amp; Co. in Coral Gables, Fla.
But AirTran did not hit its stride overnight, and the company struggled until 1999, when it hired former Eastern Airlines President Joe Leonard as its chief executive.
Until then: "The airline was a basket case that by all rights should have been dead, gone and forgotten," Klaskin said.
Attracting business travelers
Under Leonard, AirTran rebuilt its fleet and overhauled its route system. The airline also targeted business travelers -- something ValuJet had not done.
AirTran adopted assigned seating and a business class that allowed passengers to upgrade to leather seats at the front of the airplane.
The airline managed to avoid some of the work rules that major airlines complained about. Employees were required to undergo cross-training to increase efficiency. Pilots sometimes loaded baggage, while ground crew workers were expected to head upstairs and help ticket agents check in passengers.
After Sept. 11, pilots accepted a temporary 9 percent pay cut, and mechanics agreed to a four-day workweek. AirTran had to furlough fewer than 100 of 4,400 employees, all of whom were back to work in less than six months.
Competitive
AirTran has become the dominant carrier in many medium-size markets and has held its own in major markets such as Atlanta, where it competes with Delta, Leonard said.
"Nobody else, including Southwest or JetBlue, has seen the kind of head-to-head competition that we have seen," he said. "We have demonstrated that we don't survive at the whim of Delta or anyone else. We survive because we have a cost-competitive product and excellent service."
Some cities have offered AirTran millions of dollars in incentives to lure the airline to their markets, knowing that the competition would drive airfares down.