By MICHELINE MAYNARD

New York Times

April 03, 2005

FIVE years ago, flying across the United States was much the same as it had been throughout much of the jet age. Passengers booked a ticket on one of the big airlines, like United or American, and paid an average of $600 round-trip in coach class unless they snagged a discount.

As recently as 2000, major airlines had a lock on 85 percent of transcontinental business, defined as trips of 2,000 miles or more within the 48 contiguous states. Most offered at least two classes of service, sometimes three, with hot meals and all the other amenities customers came to expect on long flights.

``It was really a market that the big legacy carriers had all to themselves,`` said Darin Lee, a senior economist with LECG, an economics forecasting and consulting firm in Cambridge, Mass.

Not any more. Low-fare airlines have been gobbling market share throughout the industry, and they are now focusing on the transcontinental market with a vengeance. Cross-country flights account for almost half the business that the low-fare companies have added during this decade, LECG estimates.

The low-fare airlines` share of this market jumped to 37 percent of available seats last year, from just 13 percent five years ago. As a result, average ticket prices have plummeted, turning the transcontinental market, like those for flights within California or from East Coast cities to Florida - into a big air-fare flea market.

And the transcontinental growth of the low-fare airlines looks far from finished.

Over the next few weeks and months, airlines like Southwest, JetBlue, Independence Air and Song, the low-fare carrier run by Delta, all plan to start new routes and add flights between the coasts.

Major airlines are battling back with a number of strategies, including extra frequent-flier miles, fare cuts to lure bargain hunters and premium services to attract well-heeled travelers, on the theory that there are still people willing to pay more for cross-country comfort.

Yet, clearly, consumers are eager to pay less. The average one-way fare for a transcontinental flight has dropped by 39 percent, to $183, this year, from $302 in 2000, according to Back Aviation Solutions, an industry consulting firm.

Inevitably, airlines` revenue on those flights has tumbled. In 2000, major airlines collected 11.4 cents a seat mile - flying one passenger one mile - on transcontinental routes, according to LECG. Last year, that figure was just 8.3 cents. Low-fare airlines, meanwhile, took in even less: about 6.2 cents a seat mile, according to LECG.

But in that same period, the number of daily nonstop flights on transcontinental routes has jumped by 7.5 percent, to 670 from 623, proof that plenty of passengers want to fly cross-country.

Within weeks, travelers will have even more opportunities. On April 14, Independence Air begins flights between Washington Dulles International Airport and San Diego. On May 1, it plans to add flights from Dulles to San Francisco, Los Angeles, San Jose, Calif., and Seattle.

That is the same day Song begins service between Kennedy International Airport in New York and Los Angeles, taking over a route that its parent, Delta, has long operated.

On May 4, Southwest begins flights from Pittsburgh to four cities. On May 17, JetBlue will begin service between Kennedy and Portland, Ore., and on May 24 between J.F.K. and Burbank, Calif., its third airport in the Los Angeles area. (It already serves Long Beach and Ontario.)

Even more long-distance routes will be added later in the spring and during the summer. But not all the service is aimed at those on a budget.

United, which is owned by the UAL Corporation and is traditionally the biggest player on the transcontinental scene, has upgraded its service from Kennedy to focus on upscale passengers who may be willing to pay for frills that low-fare rivals do not offer.

In October, United introduced p.s., for premium service, on some flights between New York and Los Angeles and San Francisco. The airline pulled 70 seats out of a series of Boeing 757`s, leaving them with just 120 seats in first, business and economy-plus, which provides more legroom than standard economy.

Reminiscent of the top-level service that airlines once offered routinely, United redecorated the planes, hired a chef and, in first class, installed lie-flat beds like those already used by airlines on overseas flights.

Prices are competitive: on United`s Web site last week, the cheapest round-trip p.s. flight from Kennedy to Los Angeles was $266.90. A flight from Kennedy to Long Beach, on JetBlue, meanwhile, was $268. (Neither price included taxes or fees.)

All seven of United`s daily flights from Kennedy to both Los Angeles and San Francisco now offer p.s. service, a step that the airline said was justified by an increase in demand on those routes.

The low-fare market ``is the biggest market out there, but it`s not the only market,`` said John P. Tague, United executive vice president for sales and marketing. ``The fight over customers who will purchase our product is equally as important as the fight with the low-fare carriers.``

That philosophy wins applause from one of Mr. Tague`s low-fare rivals. ``You don`t defend everything,`` said Robert Fornaro, the president at AirTran Airways, which offers transcontinental flights from Atlanta. ``You pick your core markets and that`s where you should be.``

Despite United`s service upgrade, its 757 is a narrow-body plane. That is a nod to another trend in the transcontinental market: smaller aircraft.

Even at the beginning of this decade, airlines routinely flew wide-body jumbo jets on such routes. By contrast, many low-fare carriers fly the same smaller Airbus A-320`s and Boeing 737`s cross-country that they use on shorter trips.

That is where amenities like in-flight entertainment systems, a hallmark on JetBlue since it began flying five years ago, can make a big difference, at least in assuaging boredom.

As Song introduces its West Coast service, which also includes flights to Seattle and San Francisco beginning in July, it is heralding a new seatback system with 24 channels of live satellite TV, 24 channels of audio programs, digitally streamed music allowing passengers to create their own playlists and the choice of 10 movies.

Delta`s vice president for marketing, Paul Matsen, says he thinks that the entertainment system, as well as ``wonderful food and custom cocktails`` (available at a price), will help his airline battle JetBlue, which has a valuable head start on transcontinental travel. Song is also trumpeting that it will fly to Los Angeles International Airport, which JetBlue does not serve.

Mr. Lee at LECG said Delta, which is struggling to avoid a bankruptcy filing, might have made the right move by substituting Song`s one-class service for its traditional flights, which, like those of its traditional rivals, featured multicabin service.

``In light of what United has done, I don`t know if there`s room`` for more airlines to try to attract passengers with premium service, especially because American is also in that market, Mr. Lee said.

``If you`re talking about maximum differentiation, this may be the right bet,`` he said of Song.

Yet some analysts wonder whether the transcontinental fare competition can continue as the industry battles record prices for jet fuel. Airlines have raised prices three times over the last six weeks, including fares for some transcontinental flights, and more increases are likely if fuel prices continue to climb.

But Robert W. Mann, an industry analyst based in Port Washington, N.Y., said he thought the transcontinental market could keep growing as long as prices remained relatively low. But, Mr. Mann said, airlines ``are never headed back to those old levels of profitability, ever again.``