As a crimson-and-gold 737 roars down the runway, the Air Force anthem blares in the background. The camera closes in on Commander in Chief Herb Kelleher sitting in a control room.
"Southwest Airlines will not lose a fare war," the carrier's tough-talking president vows. "If there's a fare war, they're gonna get nuked."
The scene is just a television commercial. But the message for the industry is real. The airfare war -- once just a temporary skirmish meant to beef up ticket sales on a slow day -- has become a grueling and grinding reality that is not going away.
As such, it has forced airlines to continue painful cost-cutting, laying off thousands of workers, eliminating routes and cutting orders for new planes.
So far, the only clear winners have been passengers -- especially those at Baltimore-Washington International Airport. With fare cuts at BWI among the highest in the nation, travelers here have enjoyed substantial savings, a recent survey has confirmed.
Between August 1993 -- the month before Southwest and its low fares landed at BWI -- and August 1994, the average one-way fare from Baltimore to six key cities fell 26 percent, according to the survey by American Express Airfare Management Unit in New York.
And between September of this year and last, the average fare fell 15 percent, though business travelers -- who typically can't plan far enough in advance to take advantage of restricted low fares -- paid a surprising 40 percent less.
TTC While everyone expected fares to fall at BWI thanks to Southwest, few predicted cuts of that magnitude.
Shortly after Southwest launched its first East Coast operation here last fall, Baltimore quickly became a center for other low-fare operations. The carrier's arrival prompted Continental Airlines to introduce discounts on numerous short-distance routes. Then, to protect its East Coast turf, USAir responded aggressively with discount prices and more flights. In a domino effect, other major carriers matched prices.
In addition, new regional carriers, such as Kiwi International Airlines Inc., ValuJet Airlines and Air South, also have pushed fares down further. Nationally, average ticket prices dropped 13 percent over the past year while business prices declined 10 percent.
But low fares have not produced the profits many airlines desperately need.
So far this year, USAir has lost $362.9 million, or more than it lost in all of 1993. Although third-quarter results showed improvement, Continental has lost $90 million this year, with revenues far below the anticipated level for its low-fare Continental Lite program.
And last week, Continental Chief Executive Officer Robert Ferguson III resigned under pressure amid signs that his brainchild, low-fare program wasn't working.
Much of the problem is that both carriers continue to run much of their company as an old-fashioned, full-service business. For USAir, that has kept costs high; for Continental, it has been difficult to mesh the two diverse styles.
Even the highly profitable Southwest -- which earned $160 million during the first nine months of this year -- has seen its revenues dampened by the imitation low-fare carriers. And that has prompted an aggressive comeback by Southwest.
"We've stepped up our advertising and taken pre-emptive pricing actions," said Dave Ridley, Southwest vice president of marketing and sales. "We're in a very competitive environment for the hearts and minds of customers interested in quality, low-fare service."
The "nuke 'em" ad, which appeared during "Monday Night Football," was Southwest's first nationally televised ad in its 23-year history.
For years, Southwest had enjoyed a niche of its own -- low fares, no frills on short routes -- while other major airlines engaged in periodic discount competitions. But the explosion of low, everyday fares on short-haul routes of 1,000 miles or less has altered the aviation landscape.
Today, these low fares -- typical ly 70 percent off regular coach price without advance purchase requirements -- are available on half of the 1,000 routes under 1,000 miles that were surveyed by American Express. That compares to just 27 precent of those flights a year ago.
Most of the nation's short-haul routes are concentrated in the East. "The Northeast is a gold mine," said Tom Parsons, publisher of Best Fares, a trade journal.
During the past year, for instance, the average one-way fare from Baltimore to Boston dropped from $178 to $101, or 43 percent, while a business fare on that route plummeted from $209 to $99, or a 53 percent drop.
"The millions of dollars being saved in this area are going primarily to Baltimore business people," said Robert Harrell, executive vice president of the American Express airfare management unit.
Just in the past three weeks, even more fare cuts on some routes have been announced. Northwest Airlines launched 40 percent reductions that were immediately matched by other major carriers. Southwest said it would prolong a 50-percent-off deal. And on Oct. 28, more cuts by the major airlines, spearheaded by Delta, lowered fares 35 percent on the slowest travel days surrounding the holidays.
But even as the airline industry retrenches to keep its fares low, skeptics wonder just how long the rock-bottom fares can continue.
"It can't last," said Jay Ellenby, president of Safe Harbors Travel in Baltimore. "No airline can sustain such fares, except maybe Southwest."
Indeed, Southwest is making money largely because its costs are far lower -- 7.5 cents per seat mile compared with 11.5 cents for USAir, the industry's highest-cost airline.
But most airlines are committed to low prices so they can keep their fares down. If they're successful, ticket prices should drop another 5 percent or 6 percent in 1995.
"There's a continuous, rolling airfare war," said David Stempler, executive director of the International Association of Airline Passengers. "And the trend is here to stay."
HIGH-FLYING BARGAINS
In the protracted airfare war, consumers have been the undisputed victors. Average airfares at many of the nation's busiest airports have fallen drastically over the past year. Listed here are the average amounts that regular, full-price fares have dropped in various cities.
Figures listed below are based on a survey of one-way fares on 215 routes for 40 major cities booked by American Express Travel Services and weighted by the number of tickets sold.
CITY .. ... ... ... AVERAGE ONE-WAY ... COACH ... ... BUSINESS CLASS
Baltimore . ... ... -15% ... ... .. ... -25% .. .. .. -40%
Atlanta ... ... ... -17 ... ... ... ... -34 ... .. .. -19
Boston .... ... ... -1 ... ... .. .. .. -10 ... .. .. -4
Chicago ... ... ... -24 ... ... ... ... -3 .. ... ... -18
Houston ... ... ... -15 ... ... ... ... -7 .. ... ... -7
Los Angeles ... ... -3 ... ... .. .. .. -7 .. ... ... -5
Philadelphia .. ... -17 ... ... ... ... -9 .. ... ... -23
Washington* ... ... -7 ... ... .. .. .. -4 .. ... ... -9
U.S. average .. ... -10 ... ... ... ... -11 ... .. .. -10
* Includes fares at National and Dulles airports
Source: American Express Airfare Management Unit