The Sky May Be Falling On High Intrastate Airfares

<B> The Sky May Be Falling On High Intrastate Airfares</B>

By Frank Rosci

Sky-high airfares from cities in upstate New York to New York City have plagued business travelers for years. Now initiatives are underway in cities such as Rochester, Buffalo and Syracuse to force the type and degree of competition that should bring the high airfares down to more reasonable levels.

According to U.S. Department of Transportation information, Rochester has the fourth-most expensive airfares in the country, joining Syracuse and Buffalo in the dubious top 20 of a group of cities with the most expensive airfares nationally. Roundtrip fares from any of these cities to Manhattan could be as much as $400, while roundtrip travel to cities in other parts of the country can be purchased for less than $500.

For their part, the airlines argue that high fares are related directly to the length of a flight: The longer the flight, the lower the cost, since costs per mile decline as distance increases. Other factors that influence fares, the airlines said, include supply and demand, the population base in the two cities, operating costs and the amount of competition in a particular market.

Critics respond that upstate fares are high because airlines use cities there to subsidize fares in other parts of the country that have low-cost competition.

Answers to questions about why fares are so extreme from Rochester, Buffalo and Syracuse to New York City and elsewhere regionally aren't that surprising from wary but hopeful upstate officials.

"Basically, the fares are high because of a lack of competition," said Lawrence Meckler, executive director of the Niagara Frontier Transportation Authority in Buffalo. "Continental, US Airways and American serve the region at Buffalo Niagara International Airport, so there is competition at higher rates, but there are not nearly enough low-cost carriers that would provide competition at lower, more affordable costs."

In Rochester, travel manager Judy Mercel of Wilmorite Inc., said the fares are high because, in addition to a lack of competition, the major airlines serving the city practice predatory pricing, which doesn't allow concessions to either passengers or competitors. "Rochester is a white-collar community, in reality a kind of captive market, with major and high-tech companies, such as Xerox and Kodak, whose employees have a great need to travel on business," she said.

High fares also may be linked to perceptions about what travelers in the market can pay, Mercel noted, because people are creatures of habit, who want travel to be as convenient and comfortable as possible, and who like such perks as brand loyalty for frequent flyers and club memberships, special touches usually associated with a major airline.

However, lately more travelers seem willing to seek out lower fares. "The situation in Rochester is much more serious than people realize," she said, "because some companies have said they're thinking of leaving the city rather than continue to pay the high fares." Occasionally, the major carriers now serving Rochester lower fares, but soon raise them again when they begin to lose revenue.

In Rochester, which is working at political levels to reverse the trend, a spokesperson for the Greater Rochester Visitors Association said another reason airlines cite for the high fares is their difficulty in obtaining enough slots at other airports at the receiving end of a flight. "Aside from that, what will help lower the fares here is a long-term commitment from a number of low-cost carriers. This is certainly not the only part of the country wrestling with high airfares, but we seem to be consistently among the highest," she said.

Peoples Express provided inexpensive fares in Buffalo 14 years ago, demonstrating that the concept was workable, Meckler said. And until just weeks ago, Kiwi Airlines, another low-cost carrier, was operating between Buffalo and Newark, N.J. However, service proved unreliable. A number of flights were cancelled due to insufficient aircraft and other reasons, including safety considerations, and the airline was grounded.

"When these things happened, travelers lost confidence in them and when that's the case it becomes doubly difficult for any carrier to keep things going in any market," Meckler said.

The situation in Buffalo took a turn for the better when US Airways Express began service from BNIA to Dulles International on March 3, with three daily flights Monday through Friday and one on Sunday. Also, Shuttle America began flights to Hartford, Conn., and added flights to Trenton, N.J., in February.

Other low-cost carriers serving the area include Delta Express, Metro Air and Air Tran, but they fly mostly to southern cities and don't serve all markets, Meckler said.

The new flights bring to 108 the number of daily flights departing BNIA, including to New York City. "It's the most flights for the airport in the past five years," Meckler said.

In conjunction with the new service, the Niagara Frontier Transportation Authority announced that Buffalo's airfares, while still high, fell faster in the second quarter of last year than anywhere else in the nation. The drop of 4.4 cents per mile is about a $22 savings on a 250-mile trip.

"We continue to have conversations with a number of carriers--contacting as many as we can is our strategy--because this region is ripe for a low-cost carrier that doesn't rely on incentives," he said.

In talking with potential low-cost carriers, one start-up airline, New Air, seems to be ready to begin service this autumn. "It will have slots at JFK, which means service to New York City at reasonable rates," he said.

When a new carrier shows interest in Buffalo, Meckler said, its officials are put in touch with the community's movers and shakers, who demonstrate that the service is good for the entire community.

"If one low-cost carrier comes in and the operation is successful, competition will keep the fares down and other carriers will follow," he said.