Air Transport World

A spark for the Shuttle? (USAir buys Trump Shuttle, tries to maintain profitability of flights between New York City, Boston and Washington, DC)

If the gods of airline deregulation are looking down at what they have produced in the U.S., they probably are not smiling much about their impact on the famous Shuttle operation between New York LaGuardia, Washington National and Boston Logan airports. With USAir taking over the financially troubled Trump Shuttle last April, the Shuttle, something of an institution, is settling down to a high-fare - $140 one way; $60 on weekends - little to choose from, 2-airline premium-service market with both Delta and USAir seemingly content to let it play out the way it is.

But that is the problem. Traffic has been declining steadily from its maximum of slightly more than 4 million passengers in 1987 to fewer than 3 million in 1991. Last year, the combined Shuttle operations carried 2.9 million passengers, down 15% from 1990 and down 23% from 1988 (see chart).

The Shuttle, in previous years the Eastern Air-Shuttle the Pan Am Shuttle and the Trump Shuttle, provides an interesting study on the impact of airline deregulation. Actually, it can serve as a microscosm of what has worked and what has not worked, and how reality has established limitations on deregulation's major goal of setting up a free marketplace for airline passengers. The biggest limitation, of course, is airport congestion and the Shuttle operations have a king-size dose of it. The key airport, LaGuardia, is slot-restricted, as is Washington National. Boston, though not slot-restricted, is congested.

To makes matters worse, National is prohibited by the U.S. FAA from accepting widebody transports. Several years ago, Eastern tried Airbus A300s in New York- Boston during peak traffic hours but drop- ped the program. So, if the market were developed vigorously with low fares, etc., there really isn't much room for capacity expansion to handle additional customers. Southwest Airlines Chairman Herbert Kelleher says he looked closely at the Shuttle operation last year, when Pan Am's ills seemingly produced an opening, but declined to get into it, because of these limitations "For us, it would be like being in a pen," Kelleher told ATW. …

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