Air Transport World

Pan Am confronting Eastern air shuttle.

Pan Am confronting Eastern Air-Shuttle

First there was Eastern. Some 20 years later came New York Air. Now Pan Am enters the picture and New York Air shifts its operation to Newark.

The classic U.S. shuttle market is changing and fragmenting. Douglas B. Birdsall, New York Air president, told ATW, "There is going to be an interesting battle for market share in late 1986.'

That battle, strangely enough, will harken back to the service competition airlines engaged in when fares were strictly regulated. Experience has shown carriers that the shuttle market is relatively price insensitive, leaving service as the only effective competitive weapon.

The shuttle used to be easy. It was either Eastern or a few randomly scheduled flights. For the serious business passenger wanting to get to or from the New York City area on one hand and Boston or Washington on the other, Eastern was it. For the bulk of the past quarter century Eastern's dominance was not successfully challenged; an American effort called "Jet Express' started in 1967 but withered away in the 1970s.

One of the world's most lucrative short-haul markets is the Boston-New York-Washington corridor. The peak-hour yield averages about 35^ along this 400-mile corridor--a healthy result, but not a world beater. It is the combination of that decent yield with the volume and consistency of traffic that makes this route so important.

The three million or so passengers Eastern said it carried in 1985 on its Air-Shuttle amounted to 7.2% of the total passengers the airline carried, and 1.8% of Eastern's annual revenue passenger-mile total.

Closer to the bottom line, using an average yield of 28^ per mile to approximate peak and off-peak yields, operating revenue from the Air-Shuttle alone amounted to about $168 million in 1985.

New York Air's Birdsall said his company last year hauled more than one million passengers on shuttle market routes.

Pan Am commissioned Drexel Burnham, a New York investment counseling firm, to study its proposed shuttle operation, according to a Pan Am union report. …

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