Get ready for the L.A.-Dallas air wars.
Dallas-based startup Legend Airlines is preparing to challenge American Airlines for the laptop crowd jetting between Los Angeles and Dallas, seeking to lure them with roomy cabins, computer hookups, cellular phones and gourmet cuisine.
American already is battling back with plans to start a similar service to stop a defection by business travelers in one of its most lucrative markets, leading to a David vs. Goliath conflict.
Legend, which had been scheduled to start its service last week between Love Field and Los Angeles International Airport but was delayed by problems with the food-service and entertainment equipment, is expected to begin flying later this month once the FAA certifies the new airline. Once it gets going, it will offer five flights a day, seven days a week.
American plans to begin its four-flight daily roundtrip Love Field-LAX service May 1.
"We are not trying to be a product for the backpacker," said T. Allan McArtor, chairman and CEO of Legend. "We are the product for the briefcaser."
Legend, whose vice chairman, Thomas Plaskett, ran Pan Am and Continental Airlines, has fares ranging from $288 roundtrip for a 14- to 21-day advance ticket to $1,784 for an unrestricted fare. The fares are currently below Legend's major competitors like American. An American spokesman said the airline would adjust its Love Field fares to compete with Legend.
Lure of small planes
This is not the first time a startup has tried to offer premium service into and out of Los Angeles notably there was MGM Grand, which offered flights to New York but went out of business.
By comparison, Midwest Express, which currently offers premium service in the middle of the country, has grown to be Milwaukee's largest carrier. While not specifically modeled after Midwest Express, Legend is looking to create similar appeal in the Dallas area though unlike its larger counterpart, which offers 84 seats on its DC9s, Legend's planes have only 56 seats.
Why such small planes? At the heart of it is Love Field, an airport in the shadow of Dallas' downtown. For years, federal law has mandated that Love be used only by airlines flying to states bordering Texas. The law was designed to protect giant Dallas/Fort Worth Airport from any competition by Love but it only applies to aircraft with more than 56 seats.
That's the loophole Legend plans to jump through. Its fleet of DC9s has been reconfigured so that each plane has only 56 seats. The result is first-class legroom and service at coach prices. Legend's planes will have such amenities as live satellite television and workspaces for laptops and cell phones.
Legend will spend $1.5 million on refurbishing the interiors of each of its DC9s. American is countering by using Dutch-built Fokker F100 jets that carry 56 seats, in what is being billed as first-class seating.
"Business travelers are under-served in these big markets," said McArtor, a former FAA administrator. "They get wired and brushed pretty good. Using Love Field is a better idea, and Legend is a better product."
Legend is privately financed with $70 million from more than 65 investors, ranging from individuals, hedge funds and investment funds.
"We are not trying to be American Airlines," McArtor said. "We are aiming at the business traveler. Just like any business, you have to do things that differentiate your product from the other guys. We think Love Field does that."
Glenn D. Engel, an analyst at Goldman Sachs, said American was forced to respond to Legend in the lucrative Dallas market. "If the mosquito drinks too much blood, it will grow pretty big," he said.
American already is battling a Justice Department suit alleging it used predatory practices against three small, low-cost airlines at DFW from 1995 to 1996. It joined the city of Dallas in a lawsuit to prohibit the use of Love Field for all long-haul flights, but lost that case, which opened the door for Legend.
McArtor charged that American is engaging in the same "predatory practices" against Legend by adding its new service. A spokesman for American disagreed, and blamed Legend for the air war. "As a competitor, their presence at Love Field created this situation," said American spokesman Mark Kienzle.
Engel believes Legend is adequately capitalized in the battle against its bigger rival, but that one of its weak spots is the lack of coverage and choice of flights.
"If you miss one flight on American, it is a good bet there will be another one within an hour," he said. "The problem with low-fare airlines is that in a battle with a bigger airline, a tie means they lose."
Winning the war won't be easy. "Anybody who starts a new airline is doing a nutty thing," he said, "but attacking the big guy in his strength (Dallas) is a tough game to play."
Company Name: Legend Airlines
Top Executive: T. Allan McArtor
L.A. Base: LAX
Dallas Base: Love Field
Flights Per Day: 5 roundtrip
Price Range, One Way: $144 to $892
Type of Plane: DC9
Amenities: Gourmet food, extra legroom, live satellite TV, laptop hookups
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