Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, June 21, 1990 TAG: 9006210342
SECTION: VIRGINIA PAGE: B-1 EDITION: METRO
SOURCE: GEORGE KEGLEY BUSINESS EDITOR
DATELINE: LENGTH: Long
The introductory fares, to be in effect Sept. 6-30, will be a fraction of the lowest costs to fly on competing ASA to Atlanta and USAir to California.
In the formal announcement of its three daily round-trip flights to Atlanta, Stan Brown, an Eastern vice president for sales, said his company will aggressively seek Roanoke business fliers, such as executives of Norfolk Southern, General Electric and BellSouth Communications.
The $99 one-way fare will be good for flights from Roanoke to all Eastern destinations east of the Mississippi, as well as Kansas City, Dallas and Houston. About half of the capacity of the DC-9s will be saved for the introductory rates.
The $129 fare applies for one-way tickets to San Francisco, Los Angeles, Denver, Phoenix, Seattle and Portland.
Tickets for the introductory fares must be purchased by Aug. 15, Brown said.
After the introductory fare, Eastern's lowest price for the Roanoke-Atlanta flight will be $218 round trip, with restrictions.
Eastern's economic impact on Roanoke probably will amount to $3 million to $5 million a year, from a work force of 20 people and the costs of doing business here, Brown said. Charles Spencer will be the company's station manager in Roanoke.
Passengers flying on Eastern jets to Atlanta will be able to make connections on 312 flights to 36 cities.
Eastern is operating 800 daily flights in its system, about 75 percent of its peak before the recent strike by pilots and ground workers, which led the airline to declare bankruptcy to reorganize the company. The company dropped to about 25 flights at its lowest point in March a year ago.
Roanoke City Manager Bob Herbert told an airport news conference he is confident that the Roanoke market will support jet service by three carriers - Eastern, USAir and United. "I relish the competition," he said.
ASA, a Delta commuter line flying seven round-trips between Roanoke and Atlanta, usually does not match introductory fare cuts, according to Rob Gustafson, regional sales manager in Atlanta. He had not heard of Eastern's planned Roanoke service.
"It may hurt us for one month, but for the most part, we do not have discount fares," he said. ASA's Roanoke business is excellent, he said.
When the introductory fares are withdrawn, "the full fares are going to be the same for both airlines," Gustafson said.
ASA's lowest fares to Atlanta are $224 one way and $208 round trip, if purchased 14 days in advance. USAir's fares to the West Coast are $204 one way and $408 round trip.
USAir often matches a competitor's introductory fares, but that decision has not been made on the Roanoke service, according to Susan Young of USAir. Her company has this under review, she said.
Eastern, led by court-appointed trustee Martin Shugrue, has "a large, deep hole to climb out of," said Brown, the airline's vice president.
As Eastern tries to expand its business from its bankruptcy reorganization, however, a labor official and securities analysts see many problems ahead. For one, Eastern is operating under the burden of almost $1 billion in debt.
"I would hitchhike before I would fly Eastern," said Walter R. Eubanks, general chairman of United Transportation Union-Trainmen union at Norfolk Southern in Roanoke.
"Even if I were anti-labor, I wouldn't want to fly an airline with poor labor relations. What about its maintenance?" Eubanks said.
Unions were turned off by the anti-labor attitude of Frank Lorenzo, who owned Eastern during the long pilots' strike, followed by Chapter 11 bankruptcy.
Three securities analysts interviewed by telephone said they have doubts that the Miami airline will make it.
Tom Trantum of J.C. Bradford said this is a tough year for airlines. "If they buckle down and work, who knows?" Trantum said. "But not many people believe they will be a viable national airline again."
Edward Starkman of PaineWebber said Eastern is losing at a rapid rate, and "I don't believe it will be viable as a stand-alone airline."
Eastern will get cash from the sale of Latin American routes to American this summer, he said, "but I'm not very confident." Eastern has been going out of business for 20 years, he said.
Under Shugrue, the airline's new court-appointed trustee, Eastern recently reported higher loads and bookings, "improved from a very poor May," said Mark Daugherty of Dean Witter. Daugherty believes it is too early to assess Eastern's future.
Also Wednesday, USAir representative Bobby Wampler told the Regional Airport Commission that it will not reduce service to Roanoke as a result of Eastern's decision to start serving the airport.
"We feel we are equipped to match or provide even better service than our competitors," Wampler said.
He said a change might be made soon in the non-stop early morning jet flights from Roanoke to New York/La Guardia because fewer than 20 passengers have been using the flight.
He said the company may replace the non-stop flight with one that makes stops in another city along the way.
Municipal writer Joel Turner contributed information to this story.
by CNB