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Fliers Uneasy About Airlines' Woes : Some Concern Over Continental, Eastern Safety Checks

April 19, 1988|ROBERT E. DALLOS | Times Staff Writer

NEW YORK — Preliminary reports from travel agents and airline ticket counters indicate that some travelers are becoming nervous about flying on Eastern Airlines and Continental Airlines.

The reports came in the wake of disclosure of a number of regulatory problems for the two airlines and their parent firm, Texas Air Corp. The Federal Aviation Administration has announced that it is conducting safety checks of both carriers' airliners. And the Department of Transportation is looking into the finances of Texas Air to determine whether it is "fit, willing and able" to conduct a passenger-carrying business.

One good yardstick of passengers' reaction to the two airlines' troubles is the competition between Eastern and Pan American on the highly lucrative New York-Washington-Boston air corridor, the nation's busiest air routes.

Pan Am said the number of its shuttle passengers has skyrocketed since it was announced last Wednesday that the FAA was conducting a safety inspection of every one of Eastern's 267 airliners.

Pan Am reported that its shuttle Friday set a one-day load record, with 8,700 passengers. That is more than 2,000 above the previous record for the airline's 64 daily shuttle flights.

However, Eastern said its business on the shuttle was also very heavy over the weekend because Monday was a holiday, Patriot's Day, in Boston. On other routes, said Paula Musto, an Eastern spokeswoman, "We have not discerned any impact. It's hard to put your finger on something like this."

Pan Am said its market share on the busy shuttle routes has been growing steadily, from 36% in January to about 42% now. That is bad news for already money-losing Eastern, which is based in Miami.

The Eastern shuttle has been the most profitable single part of Eastern. According to one study in 1986, the shuttle accounted for 55.2% of the airline's operating profit while accounting for only 1.7% of its revenue passenger miles.

The shuttle is so profitable because overhead is so low. Business travelers, usually making a round trip in one day, board the planes without reservations, so few clerks are needed. And few baggage handlers are needed because there are not many suitcases to be checked.

On Sunday, Transportation Secretary James H. Burnley IV said Continental's planes would also be inspected. Until that time, Texas Air's problems had had little effect on Continental because many travelers did not know that the airline was a Texas Air subsidiary.

"It is too early to tell if this has done anything to our business," Bruce Hicks, a Continental spokesman, said Monday. "But if reporters keep sticking microphones in front of passengers, asking, 'Aren't you afraid to fly?', it will hurt more."

Analysts said even while Texas Air is being examined for financial stability, the situation might deteriorate because of a drop in business resulting from the well publicized safety inspections of its two beleaguered subsidiaries.

"That it will hurt there is no question," said Louis Marckesano, airline analyst with the Philadelphia brokerage of Janney Montgomery Scott. "It's like the old business of the bank calling for payment of a loan when the borrower is in trouble. Sometimes it pushes the borrower over the edge, though I don't think Texas Air will go over the edge."

Travel agents surveyed Monday said that while the latest problems for the two airlines might further hurt business, both had already lost favor with passengers.

"It's much like the stock market," said William Single of Getz International Travel in San Francisco, which serves mostly business clients. "They've (the latest problems) already been discounted."

Most travel agents said they leave the choice of air carrier to their customers. "I try not to play God for any customer," said Barbara Lieberman of Quartet Travel in Larchmont, N.Y. "It's just like the terrorist attacks in the past. When they happened, people had to make up their own minds if they wanted to cancel their trips."

Barbara Rothschild, owner of Evergreen Travel in West Los Angeles, said that when she arrived at the office Monday morning she instructed her agents to "keep a close eye on this Continental-Eastern situation. I don't know if it's political or not."

Nevertheless, there were five reservations made for Prudential Insurance employees on Continental planes from Los Angeles to Houston. Continental operates the only non-stop, she said.

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