ValuJet Readies to Fly Again, But Will Passengers Return?

TICKET PRICES A KEY

Valujet's expected return to the skies will test the ability of an upstart airline to recover after an aviation disaster - and offer clues about public confidence in the overall industry.

As the carrier calls back some of its employees in anticipation of flying again soon, two questions loom: Will passengers return to the airline after all the negative publicity about safety, and can it maintain low fares while complying with increased federal oversight?

The answers are not certain.

The low-fare airline has been grounded since June 17, after a plane crash in the Florida Everglades prompted an intensive review of ValuJet by the Federal Aviation Administration (FAA).

Even though the cause of the crash is apparently not the airline's fault - hazardous materials loaded into the cargo bay by a subcontractor are suspected - the company still has to win back customers at a time of heightened public awareness of the dangers of air travel.

At the same time, it will be difficult for the airline to maintain bargain-basement ticket prices - a strategy that helped turn it into the most profitable airline in history - given the FAA's heightened scrutiny of it operations.

"I think ValuJet will come in and offer low fares that will affect fares in the markets they fly, just like they affected them originally," says Marty Salfen of the International Airline Passengers Association. "But their costs will go up because of the increased scrutiny - the checking and double-checking of their pilots and maintenance."

Last week ValuJet called back scores of flight attendants, pilots, and reservation agents in anticipation that a go-ahead by the FAA and the US Department of Transportation is forthcoming.

The airline intends to return with seven aircraft serving five cities. (It has not divulged which cities.) It plans to gradually increase service to 15 aircraft serving 17 cities, which is the limit allowed under a consent order signed by ValuJet and the FAA.

The low-cost carrier has not announced what its new fares will be. But the fares are expected to have an impact on ticket prices in the markets it serves.

"It will probably come back with unbelievable fares to gain the public's awareness that they're back flying, and I think they will fill those planes," says Lauraday Kelley, president of the Association of Retail Travel Agents, based in Harrisburg, Pa. She says that the flying public quickly forgets accidents when they see a price that can't be beat.

But ValuJet will have greater competition now than in the past. Two other airlines - Delta Express and Southwest Airlines - have positioned themselves in some of ValuJet's former markets.

ValuJet admits this has been a costly period for the company. "Fortunately we're in a very strong financial position," says ValuJet spokesman Greg Kenyon. "We closed the second quarter with $208 million cash in the bank, and we own all the aircraft."

ValuJet's flight crews recently finished their "proving runs" - tests the FAA administers to see how the crews perform under certain conditions, including emergencies. "The proving runs were one of the final requirements that ValuJet had to fulfill," says Mr. Kenyon.

The airline has had to pursue a two-track certification process with the FAA and the DOT. The FAA is responsible for technical and safety issues, while the DOT certifies the carrier's economic fitness. Both say only that the airline is "under review."

The FAA has been criticized for "lax" oversight of the low-cost start-up, and has come under intense scrutiny for the way it handled the shutdown. Many, including Anthony Broderick, the former FAA deputy administrator who retired after the FAA's shutdown of ValuJet, say the carrier would never have been grounded were it not for the intense media attention following the May crash.