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Evaluating niche airlines
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July 1, 1998: 1:33 p.m. ET
Alaska/Horizon, Southwest, KIWI offer lower prices with no frills
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NEW YORK (biztravel.com) - Niche airlines have come a long way from their humble beginnings as puddle jumpers. In fact, six of the carriers nabbed top 10 spots in the 1997 Conde Nast Readers' Choice Poll.
So why the newfound popularity? The primary reason is cost. Both round-trip and one-way fares are cheap (there's no penalty for not purchasing a round-trip ticket) and often don't require advance purchase, wooing business travelers who make quick itinerary decisions.
Regional routes flown also cater to business travelers, and now more small airlines are starting to offer cross-country flights. As an added plus, small airlines have become popular enough to impact the major carriers.
"Small carriers keep fares low, forcing bigger airlines to compete," said Donna McGovern of New York's Number One Travel.
It's not all good news, though. Tight budgets often hinder the success of niche carriers. Because many can't afford the $1 million slots (rights to land and take-off at certain times) at major airports like Washington National and Chicago O'Hare, they can't offer competitive services there.
Some don't participate in interline baggage agreements, so you must claim your bags and then re-check them to transfer airlines. Some also cannot afford $60,000 per year to participate in computerized reservation systems.
The high cost of maintaining an airline can push a company into the red. ValuJet recently merged with AirTran, and Western Pacific closed down on February 5, 1998. Such troubles can interfere with your travel.
When Air South stopped flying, other airlines refused to honor its tickets. Passengers were forced to buy tickets on other carriers to reach their destinations.
Many travelers are also worried about safety issues, especially following some recent crashes. However, in 1996, The Federal Aviation Administration mandated that safety regulations covering major carriers be extended to planes with as few as 10 seats.
Airline pilot Mike Bierscheid notes that small airlines are held to the same standards as major ones: "These are 'small major' airlines, but believe me, safety is no more a concern on these than on United, American, Delta, or Northwest," he said.
In this two-part series, biztravel.com will evaluate several niche carriers, beginning with Alaska Airlines, Horizon Air, Southwest Airlines and Kiwi.
ALASKA AIRLINES & HORIZON AIR
Alaska/Horizon flies throughout the Northwest, the U.S. West coast, Alaska, Canada and the Russian Far East. Its holding company, Alaska Air Group, is the darling of several surveys.
Alaska ranked second and Horizon sixth in Conde Nast's Readers' Choice Poll 1997 and Alaska clinched the second spot on the 1997 Zagat Survey, where 10,000 frequent flyers were asked to evaluate airlines on the basis of comfort, service, timeliness, and food.
In terms of safety, Alaska was voted the second safest medium-to-small airline by the 1994 Dallas-based International Airline Passengers Association. There was one crash (111 people died) in 1971, and in 1976 an aircraft overran the runway after landing (one passenger died).
Alaska and Horizon partner with Northwest, British Airways, Qantas, and TWA frequent flier programs. They offer ticketless Instant Travel Kiosks in terminals, and have eliminated traditional paper tickets and opted for plastic boarding passes, earning them a gold star for originality.
SOUTHWEST AIRLINES
Southwest started out as a small carrier, but has technically graduated to the status of a major carrier, as they now generate more than $1 billion in annual revenue.
Southwest flies to 51 cities, including Seattle, Los Angeles and Chicago Midway. The leader in "no frills" service, its discounted short-legged routes, peanuts for lunch and cattle-call boarding system fly in the face of most major airlines.
"Southwest seems to cut out a lot of the B.S. of running an airline, so they can concentrate on the product," Bierscheid says. "Their employees are happy, and they're not afraid to help out to get the job done."
For example, Bierscheid says, pilots will often help load luggage to keep a flight on time, a practice that is forbidden in the pilots' union contract at most major airlines.
Southwest is definitely doing something right. In 1997, J.D. Power and Associates ranked Southwest fourth for both long flights (over 500 miles) and short flights (under 500 miles).
In 1995, the National Institute for Aviation Research weighed 19 factors including mishandled baggage, average cost per seat-mile and on-time performance, giving Southwest the number two slot in its airline quality rating. And although Southwest has reported 7 accidents, none were serious, and there were no fatalities.
Southwest's net income rose 22 percent for the first half of last year, according to SnapShot Market Guide Reports. This figure reflects greater revenue passenger miles, the addition of 15 aircraft, and lower maintenance expenses due to fewer engine repairs.
Southwest's Rapid Rewards club is based on segments, not miles, since the airline specializes in short routes. And they don't limit discounts to weekend travel.
Last year, Southwest introduced MedLink, a service in which board-certified emergency room physicians are on call to assist flight attendants during in-flight medical emergencies. This feature earns them a gold star for concerned customer service.
KIWI INTERNATIONAL AIRLINES
Formed by laid-off airline workers and named after a flightless bird, Kiwi offers flights between Chicago Midway, Boston, Atlanta, Newark, Orlando, Tampa, West Palm Beach, Las Vegas, and San Juan, Puerto Rico. Kiwi boasts pilots who average 24 years of flying experience and mechanics with 18 years of technical experience.
Last July, the 5-year-old upstart emerged from a 10-month stint in Chapter 11 after a private investment group paid the airline's $16.5 million debt.
Financials aside, KIWI earned the 10th spot on Conde Nast Readers' Choice Poll 1997, and was praised for its affordable fares and "friendly, upbeat staff."
Zagat's respondents found KIWI's food "surprisingly good," and concluded that, along with Alaska and Midwest Express, it offered the best value. KIWI also boasts a perfect flying record with no accidents. However, it should be noted that Kiwi temporarily suspended flights in 1994 after FAA inspectors raised questions about its pilot-training records.
The Kiwi Klub frequent flier program offers a free roundtrip ticket with 8 roundtrips (or 16 one-way segments) within 12 consecutive months. 
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