Passengers Win as Airlines Wage War

Are you familiar with Orange County, Calif?

John Wayne used to hang his Stetson there (the airport is named for him) and there's some great shopping over at the South Coast Plaza (home to Baccarat, Balenciaga, and Bulgari) -- and need I mention The House That Mickey Built?

But at the moment, this monument to suburbia is, plain and simply, a battleground. For Orange County has been chosen as the arena for an epic contest between Virgin America and Southwest.

Yes, it's war! Or rather, a good old-fashioned airfare war. And it's not the only one. But first, let's take a look at the "Golden Orange."

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The opening salvos came from Virgin AmericaRichard Branson's mood-lit baby. Amidst massive domestic flight cutbacks, Virgin America decided to begin flights between Orange County and its headquarters in San Francisco April 30. And, as so often happens, Virgin decided to inaugurate this new route with a sale, and it's a good one -- just $59 one way.

Enter the always-scrappy Southwest. It, too, has decided to fly in and out of Orange County -- beginning May 9 -- and not surprisingly, matched Virgin's $59 fare. Then Southwest reconsidered, and upped the ante -- so now it's offering flights for a rock-bottom $49 -- just a bit over what it costs to check two bags on most airlines.

"Uh-oh," said the big boys (United and American) who used to own this route. They could see what was happening, and dropped their own fares to $59. If you're saying, "Yeah, so what?" then you have forgotten that just a year ago, these fares cost more than twice as much -- $125 one way. In comparison, $59 or $49 isn't a deal -- it's a steal.

And the winner is: you, my friends, the passengers. But as I said, it's not the only war being waged.

Southwest is staking its claim to Northwest's hub in Minneapolis -- or it is as of March 8 when the airline begins flights between Minneapolis and Chicago. The knives are out -- Southwest is slashing prices, and of course, the others are fighting back.

In this economy they have no choice. Just a few short months ago, the cheapest airfare offered by American, Northwest and United for flights between Minneapolis and Chicago was a hefty $376 roundtrip, or $188 each way. Times have changed. Southwest now lists fares for as little as $49 each way, forcing hub carriers Northwest and United to match. Net savings to you? Close to 300 bucks roundtrip.

Ever notice how so many wars seem to revolve around just a couple of gunslingers in particular?

Yes, I'm talking about these low-cost carriers: AirTran, JetBlue and Southwest, and more recently, the hybrid, Virgin America. For years these "little guys" had to fight for respect -- and routes. Not surprisingly, they got good at it, and the Goliaths of the airline industry often walk away from these encounters bruised and bloodied.

So, how to determine a winner in an airfare war? Is it last carrier standing? Not usually. Sometimes, "winning" is as simple as getting a foothold in a new route -- a chance to win over some new customers, and maybe, ultimately, make a little money. Maybe make a ton of money one day (but I don't think we'll be seeing that for a while).

But, as in all conflicts, there are casualties -- whether it's an airline taking a financial hit it can ill afford at this precarious time in our economy -- or the out-and-out death of a carrier.

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