Who Will Be King of the Corridor? : AirCal Challenges PSA on L.A.-San Franciso Route

San Diego-based Pacific Southwest Airline’s dominance in the competitive Los Angeles-to-San Francisco corridor is coming under a new attack by longtime rival AirCal, which is trying to lure passengers with free champagne and croissants.

AirCal, a Newport Beach-based regional airline that has been steadily increasing its passenger loads and earnings since its near financial collapse two years ago, began a $500,000 advertising campaign two weeks ago, promoting its “Almost First Class” service between Los Angeles International and San Francisco International airports.

The airline hopes the added amenities--more leg room, wider seats and fresh fruit and cheese--will help secure a bigger share of the estimated 3 million passengers who annually travel between the two airports.

But PSA and airline analysts are skeptical about whether the new promotion can accomplish AirCal’s goal of capturing 3% more of the traffic, which would bring it an additional 90,000 passengers per year.

The Los Angeles-San Francisco route is the backbone of the so-called California Corridor (between five major Southland airports and three in the Bay Area), which annually attracts 6 million air travelers.

In 1984, 38% of the passengers flew with PSA, while AirCal’s share was 35% and United Airlines’ was about 15% of the market, according to Dun & Bradstreet, a New York business information service.

Frequency Called Key

PSA said it had about 44% of the passenger traffic along the corridor through the first half of last year, based on Civil Aeronautics Board statistics, and expects second-half results to be little different.

Although the airlines do not report passenger traffic figures for specific routes, PSA said more than 40% of its activity is in the corridor, while AirCal said it is twice as dependent on that market, with about 80% of its flights scheduled for airports in the corridor.

PSA’s strategy for keeping its crown as king of the corridor is a simple one: “Frequency, frequency, frequency,” according to spokeswoman Margery Craig.

“Every marketing study shows that the number-one thing that business fliers look for is convenience of schedule, and that means frequency” of flights, she said.

So PSA is planning to operate more flights of smaller aircraft. The airline is in the process of purchasing a score of new, fuel-efficient BAe-146 jet aircraft that seat only 100 passengers, compared to the usual corridor workhorse, the DC-9 Super 80, which carries 150.

Added Flights

The airline recently announced it will add two flights between Orange County’s John Wayne Airport and San Jose Airport, effective April 17, and on May 23 plans to begin nonstop service between Orance County and Las Vegas with two daily flights, plus a third flight on Fridays and Sundays.

And to directly counter the AirCal program, PSA launched a new television and radio advertising campaign recently, which asks viewers and listeners to question, “when some one tells you they are ‘almost first class’, don’t you wonder what else they are ‘almost’ at.”

But for the past two years, AirCal has been steadily increasing its passenger traffic, with at least some of the gain coming from added flights in the corridor and some selective discount fares. Although total miles flown have increased, AirCal’s planes have been flying with fewer passengers than last year, cutting down on each run’s profitability.

To fill those seats, AirCal’s new promotion is directed at business travelers and “the discretionary flier looking for value,” said Arlynn Whittaker, AirCal’s marketing director.

AirCal’s one-way, unrestricted, unlimited fare between Los Angeles International and San Francisco is $89. PSA and United Airlines have the same fare but lower discount fares are available on all three air carriers.

In addition to the Los Angeles-San Francisco flights, AirCal will offer the “Almost First Class” service on its San Francisco-Seattle route, which is also serviced by PSA. If it proves successful, the airline will offer the service on all its routes, Whittaker said, including those to the Bay Area’s three airports from John Wayne.

Dan R. Wewer, an analyst at Rauscher Pierce Refsnes Inc., a Dallas-based brokerage firm, said AirCal’s new campaign may work if the airline can maintain a competitive flight schedule and fare structure. “If they are lacking in either area, free champagne is not going to make a difference,” he said.

Wewer said attempts by airlines, such as Braniff, to upgrade in-flight service without competitive flight and fare schedules generally have ended in failure.