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Driving Up Costs

In Southland, Car Owners Shell Out More

April 21, 1998|JAMES F. PELTZ | TIMES STAFF WRITER

If you drive a new car in Southern California, here's something to ponder the next time you're stuck on the freeway: The price of sitting there is 5% higher than the national average.

So says the American Automobile Assn. and its largest affiliate, the Automobile Club of Southern California, in surveys released Monday. The reason: Just about everything involved in owning a car costs more in Southern California.

"Overall regional increases in ownership costs, such as insurance, depreciation, taxes, license and registration are responsible for higher driving costs," Steve Mazor, principal auto engineer at the Auto Club of Southern California, said in a statement.

The club found that Southern Californians can expect to pay about $7,283--or 48.5 cents a mile--to own and operate a new vehicle this year. The figures are based on composite estimates taken from three new U.S.-built cars that would be driven 15,000 miles a year.

The AAA, based in Orlando, Fla., said the national cost is $6,908, or 46.1 cents per mile. That's an increase of $185--or 2.8%--from a year ago. By comparison, the U.S. consumer price index rose 1.7% in 1997, the lowest inflation rate in 11 years.

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Trans World Airlines is launching a new frequent-flier program aimed not only at bolstering its weak profit outlook, but allaying business travelers' gripes about sky-high fares.

Under the program, TWA is awarding free miles based not only on the number of miles a traveler flies, but on the dollar amount of the passenger's fare. One bonus mile will be awarded for every dollar spent by members on full-priced fares, excluding taxes, fees and surcharges.

TWA claims no other major U.S. airline has such an offer, and the carrier is probably right, said Valerie Estep, president of Topaz International, a travel consulting firm in Portland, Ore. But she's doubtful about whether the program will significantly help the St. Louis-based airline.

"It certainly is another ploy that TWA is using to increase their passengers' loyalty," she said. "But I'm not sure how much difference it will really make."

TWA needs to do something to stand apart from the industry, and it acknowledges that its strategy taps into passenger complaints about soaring unrestricted, last-minute, walk-up fares--those usually paid by business travelers.

Its new program is "an extra way of recognizing" that those passengers "contribute not only to the success of that flight, but to our bottom line in general," said TWA's Jim Brown.

TWA's bottom line needs help. The nation's eighth-largest carrier has dramatically narrowed its losses in the last 18 months, but it's still not sharing the record profits that the rest of the industry is enjoying. TWA lost $127 million on revenue of $3.3 billion in 1997.

United, the nation's biggest airline, "is definitely going to watch TWA" but has no plans to match its new program, said United spokeswoman Mary Jo Holland. "We are constantly evaluating our programs" for frequent fliers, she said.

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In its third annual study of customer satisfaction with rental-car companies, researcher J.D. Power & Associates came up with a tie for first place between Hertz, Avis and National.

But the deadlock raises the question: Did all three win because they all excel at meeting customer needs or because customers can't see much difference among them?

Power sided with the latter explanation. "The study indicates how difficult it is for car-rental companies to differentiate themselves in the eyes of consumers," said Tim Gohmann, Power's travel practice director.

Put another way: The study shows there's "a real opportunity" for one of the companies to stand out if it can deliver "truly outstanding service," he said.

Times staff writer James F. Peltz can be reached at james.peltz@latimes.com

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