May 13, 2007

From cloudy service to brighter future

What airlines' new spending means for fliers

After years of airline cutbacks, some fliers may have become resigned to dingy seats, costly snacks and surly service. But, now somewhat more flush with cash, carriers are planning a host of upgrades.

Middle-aged airplanes like Boeing 757s and 767s are getting interior makeovers at American, Delta and US Airways with enhancements like new seats, overhead bins, carpeting, video monitors and entertainment systems. Some airlines, including Delta and US Airways, are planning to add tastier and heartier food to sell on flights. Carriers are sprucing up some airport terminals. And airlines are testing new technology that may shorten lines.

Continental Airlines says it will begin installing new kiosks at its Newark, N.J., hub later this month that will let customers rebook themselves after they miss connections or have flights canceled by storms. For travelers, that would be a huge improvement over waiting in an airport line or a telephone queue.

Delta Air Lines, just coming out of bankruptcy, has been spending $25 million a year to "deep clean" airplanes once a month, and by December should be finished installing "Live TV" entertainment systems on planes that fly long-domestic trips. The new systems include on-demand movies, live TV, music and games.

The five biggest airlines do have some money to spend, having added $2.6 billion in unrestricted cash to their balance sheets over the past 12 months, a 19 percent increase. American Airlines upped its cash position by $1 billion to more than $5.4 billion and even paid down $2.2 billion in debt at the same time. American's total debt is still huge, however -- $17.5 billion.

Though carriers have turned profitable, they still worry about high oil prices, softening domestic demand and having enough money to make it through the next downturn or crisis. Some have been reluctant to make major investments in planes and people, knowing the economy can turn on them again. Paying down debt is a major issue for the industry.

Still, having postponed improvements, and seen airports and airplanes age during the prolonged downturn, airlines are starting to spiff up their products.

Travelers also say in-flight enhancements are long overdue, especially when discount competitors are offering nicer products. Entertainment systems like satellite television and higher-quality food for sale would be welcome, especially on long flights.

A few carriers are also beefing up staffing, putting more resources toward training and launching programs aimed at boosting employee morale. US Airways says it is rushing to hire 1,400 additional airport workers by summer and Continental plans more "soft-skills training" for airport customer service staff. Delta is giving bonuses to employees, instituting profit-sharing and paying 4 percent raises for most workers as it comes out of bankruptcy.

"Having better morale among employees really helps the operation," says Jim Whitehurst, Delta's chief operating officer.

The new focus on staff at a few airlines is welcome news for many travelers hoping for shorter lines, fewer cancellations and friendlier service. "Fliers who are always on planes just want service, politeness and a clean plane," said Judith Schwager of Chicago.

Airlines are tackling major airport renovations, some of which were tabled or delayed in the downturn. Delta said it spent $30 million during its bankruptcy reorganization to spruce up the airport lobby in Atlanta. Next on Delta's "To Do" list: Upgrade JFK and LaGuardia facilities in New York, upgrade planes that fly international routes and roll out better food for sale.

SCOTT MCCARTNEY, Wall Street Journal

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