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Continental's Chief Assesses Industry Trends

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By NEIL JOHNSON

njohnson@tampatrib.com

Published: October 31, 2008

TAMPA - With a softening economy, volatile oil prices and fewer passengers, this has been a difficult year for the airline industry, said Larry Kellner, chairman and chief executive officer for Continental Airlines, the world's fifth-largest airline.

Kellner was in Tampa on Thursday to receive the 2008 Tony Jannus Award given for achievement in commercial aviation. The award is named for the pilot of the first scheduled airline flight between St. Petersburg and Tampa on New Year's Day in 1914.

Kellner discussed some of the issues facing Continental.

The price of jet fuel has fallen 18 percent from a year ago. Will fares reflect this reduced cost?

Kellner said airlines may begin to offer more sales on fares, such as a limited-time offer of a lower fare if you book by a certain date.

"Even in the last month or so, we've seen more fare sale activity," he said.

Fare discounts also could indicate that an airline has seats it wants to fill on certain flights, Kellner said.

Will Continental continue free meals on longer flights?

Kellner said yes on flights that are long enough to allow meals to be served.

"And we'll keep pillows and blankets."

Also, the airline was slow to implement luggage fees after others began charging, he said, but Continental saw no real increase in business from not charging.

"We've got to remain competitive," he said.

"We try to find ways to allow loyal customers to avoid fees."

Delta and Northwest airlines recently received U.S. Justice Department approval to merge. What happened with talks of Continental merging with United Airlines?

"I think our best position is to move forward as an independent carrier," Kellner said.

The company decided risks of the merger were larger than benefits.

"It's not just a spreadsheet analysis. There are huge people impacts and huge customer impacts," he said.

Plus, the volatility in fuel and credit markets was part of the decision.

How is your Tampa reservation center doing?

The airline will continue to assess the operation, but the volume of calls is down about 25 percent in October compared with October 2007, Kellner said.

Ticket sales from the airline call centers are down a bit more.

Reporter Neil Johnson can be reached at (813) 259-7731.

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