ValuJet And Pan Am Return As Kiwi Quits Routes

<H1> ValuJet And Pan Am Return As Kiwi Quits Routes</H1>By Jay Campbell

Their histories are vastly different, but the paths of ValuJet and Pan Am crossed last month when the two carriers re-entered the domestic airline industry-both with a lot of fanfare and a little controversy.

ValuJet, whose May accident in the Everglades sparked widespread public scrutiny of itself and the Federal Aviation Administration, returned Sept. 30 with 32 DC-9 departures from Atlanta to Ft. Lauderdale, Orlando, Tampa and Washington, D.C. The carrier's introductory fares were $19 each way, resulting in a 100 percent load factor on the first flight. Throughout the month of October, ValuJet will introduce additional cities served from Atlanta, including Columbus, New Orleans, Louisville, Raleigh-Durham, Chicago (Midway) and Philadelphia.

ValuJet president Lewis Jordan announced the comeback in a press conference highlighted by the cheers of ValuJet employees. However, some employees, particularly members of the Association of Flight Attendants, continued to protest the Department of Transportation's approval of the re-entry. Although the AFA said it is concerned with safety, airline industry observers wrote off the complaint as a "union gripe," based on the AFA's previous contract disputes with ValuJet.

Pan Am (<I>BTN</I>, Aug. 5) finally cleared DOT approval over the objections of families of the victims of the 1988 Pan Am Flight 103 crash. The carrier began service on Sept. 26 with A-300 flights from New York's JFK Airport to Miami and Los Angeles. Introductory coach fares were $99 to Miami and $199 to L.A.; first-class fares were $198 and $398, respectively. Pan Am eventually will serve Chicago and San Francisco as well.

The dual comeback occurred just before another low-fare competitor, four-year-old Kiwi International, filed for Chapter 11 bankruptcy protection. Kiwi continues to operate those routes on which it carries the most business travelers--between Atlanta, Chicago and Newark (<I>BTN</I>, April 22)--but eliminated service to West Palm Beach, Orlando, Tampa, Las Vegas and Bermuda in lieu of a successful reorganization.

Kiwi president Jerry Murphy cited the ValuJet crash as having a major impact on the airline's bottom line. "The ValuJet crash on May 11 started a downward spiral that was dramatically accelerated when the FAA, under intense public and media pressure, took the unusual step of putting four aircraft on the ground, although we have a perfect flying record," he said. "Through these events, Kiwi has slowly bled to the point where we have to take action."

Murphy said Kiwi is attempting to secure $5 million in financing, which will help the carrier restructure its debts.

In related news, the prospects of future entrants were slightly dimmed when an FAA task force recommended changes in the way the agency certifies and monitors start-up carriers. Formed after the ValuJet crash, the group reported that the agency should make certificate applications more rigorous and expensive. The task force also indicated the FAA should increase surveillance of new carriers for up to five years of operations. FAA administrator David Hinson supports the recommendations.

Meanwhile, there was no shortage of approvals for new entrants last month. Among those given final approval for an operating certificate by the DOT were Air 4000, which will fly from Myrtle Beach, S.C. to Cleveland, Detroit and Philadelphia; Maverick Airways, which will fly from Denver to Steamboat Springs and Grand Junction, Colo.; and Pro Air, which will serve Detroit to Baltimore, Boston and Milwaukee.

The DOT also gave preliminary approval to Hicksville, N.Y.-based Vision Air, which plans to provide six weekly round trips between New York's JFK and London's Stansted airports using a leased 323-seat, L-1011-100 aircraft.