By Lindsay Toler
By Chad Garrison
By Brett Koshkin
By RFT Staff
By Lindsay Toler
By Riverfront Times
By Danny Wicentowski
By Pete Kotz
Flight 551 is scheduled to leave Boston for St. Louis this morning at 8:25. Aboard the Trans World Airlines MD-80, sitting in coach, are the Jones and Smith families. Their ultimate destination: the sun and sand of Honolulu. It is, after all, nearly springtime, and winter-weary Bostonians need to bask in the tropical Hawaiian sun. After an hourlong layover at Lambert International Airport, the Joneses and the Smiths will board TWA Flight 1, a Boeing 767 that will whisk them from St. Louis to the land of grass skirts, pineapples, black-sand beaches and Don Ho.
But let's forget paradise for a minute -- and instead do a little math. Let's say the Smiths bought their round-trip Boston-to-Honolulu tickets last month from TWA's Web site for $1,050.47 per ticket. And the Joneses purchased their tickets -- for the identical flights -- from Lowestfare.com, a discount air-travel Internet site, for $645.82 per ticket. So how much did the Smith family save? The answer: $404.65 per ticket.
The Joneses paid almost 40 percent less than the Smiths to sit in the same planes, an unusually good deal.
Lowestfare.com offers similar savings on dozens of other TWA flights. But there's a catch -- not for the Bostonians but for St. Louisans. The deals don't apply to travel originating at Lambert. When the Webster family of Kirkwood, seeking a beach escape, bought their round-trip St. Louis-to-Honolulu tickets last month from TWA's Web site, they paid $882.47 per ticket to sit on the same TWA Flight 1 taken by the Joneses and the Smiths. Of course, the Websters could have logged on to Lowestfare.com, where the tickets were priced at $882.46 each -- and saved a whole penny per ticket.
In short, for the privilege of living in the St. Louis area, the Websters had to pay $236.65 more per ticket than the Joneses did -- even though they traveled 2,400 fewer miles.
Welcome to the weird world of airline-ticket pricing, discounts, dot.com deals and consolidators. Thanks to the Internet, companies like Lowestfare.com are able to market cheap fares directly to the public, bypassing travel agents and airlines' own reservations centers. They're helping fill airplane seats, but they're also keeping a lid on airline profits. For a struggling airline like TWA, the discount fares represent even more pressure on the bottom line.
But in TWA's case, it's about more than just money. What makes the situation unusual is that behind its deal with Lowestfare.com stands Carl Icahn, the corporate raider who at one time was celebrated as TWA's savior but is now widely regarded by TWA management, employees and most St. Louisans as the airline's chief nemesis, a veritable gremlin on the wing.
Icahn has been peddling discount TWA fares since 1995 as part of an eight-year deal the airline negotiated with his Karabu Corp. to pay off a $190 million loan. The airline and Icahn have been locked in lawsuits over the terms of the agreement; so far, Icahn has been winning.
There's no love lost between Icahn and the airline -- Icahn privately fumes about TWA's current management; airline executives, off the record, complain bitterly that Icahn is continuing to hurt its operations.
But officially, both sides measure their words carefully.
"TWA makes it a policy not to discuss consolidators or Carl Icahn," says Julia Bishop, TWA manager of media relations. "We just have to be very, very careful about anything we say publicly," adds airline spokesman Jim Brown. TWA instead pointed The Riverfront Times to its corporate filings with the U.S. Securities and Exchange Commission (SEC).
Icahn, for his part, denies that the Karabu deal is hurting TWA; he insists it is actually helping the airline's financial health. "If they didn't have us," he says in a telephone interview from New York, "they would be much, much worse off than they are today."
He's right about one thing -- TWA is hurting. Industry analysts, who have watched as TWA struggled to improve its operations in the 1990s with the help of union concessions, cash infusions from St. Louis corporations and public subsidies, wonder how Icahn's deal could possibly help an airline that has just reported massive losses and seen its stock tumble in recent weeks to new lows. For TWA, the issue becomes even more urgent now, thanks to skyrocketing jet-fuel prices, which have more than doubled in the past year.
And many others are even less optimistic.
Cheating corporate death is nothing new for the folks at TWA. If anything, Trans World is one tough airline. It's sought bankruptcy protection twice in the 1990s, and as recently as 1997, many industry analysts predicted -- incorrectly -- that it would be heading back to bankruptcy court a third time.
Once upon a time, TWA was among the nation's elite passenger carriers. The airline, once the nation's biggest and now the eighth-largest, was the first in the industry to offer air-cargo service in the U.S. with a shipment of livestock from St. Louis to Newark in 1931. It was also the first airline to fly coast-to-coast on a route laid out by Charles Lindbergh. Other notable achievements include being the first airline to operate a pressurized all-weather aircraft (the Boeing Stratoliner), the first to brew fresh coffee and offer in-flight movies, the first to fly the Boeing 747 in the U.S. and the first to fly transatlantic using twin-engine jet planes. But in recent history, TWA's image and reputation have been nothing short of turbulent.