Not using tickets is one reason ValuJet has such low fares. Kulp paid $89 to Atlanta. At $178 round trip, Kulp could afford to take a colleague along on a sales call.
"The price was right," he said. "It was half what Delta was charging, so two of us could go for the price of one."
Kulp is typical of the thousands of business and leisure travelers who are discovering little ValuJet, by far the most successful of a crop of new airlines to have entered an often-brutal industry in the last two years.
It's one of three of the start-up carriers to serve Philadelphia. The others are Midway Airlines and Spirit Airlines.
ValuJet not only has made money since it started operating a year ago, but airline analysts rank it as the most likely of the new carriers to thrive for years to come.
ValuJet combines some of the lowest costs with one of the most experienced managements in the industry. It was well-financed from its beginning and staged a wildly successful intial public stock offering in June. Its over-the- counter stock now trades in the $20-a-share range, twice the initial price. It is sticking to a game plan of moderately fast growth, using only one type of jet, well-used but solid DC-9s, twin-engine jets that are cheap to buy and operate.
Last week, ValuJet reported $13.8 million in profits on $88.7 million in revenue in the first nine months of 1994.
"No other new entrant . . . and no other airline matches ValuJet's profitability," said Kidder Peabody & Co. analyst Samuel C. Buttrick.
Virtually the only negative thing some analysts can say about ValuJet is that they consider its stock overpriced.
"From a fundamental viewpoint . . . they look very solid," said analyst Edward Starkman of The Transportation Group Ltd., a New York investment firm. ''You have a management a lot of people have a lot of confidence in. They're very down-to-earth operating guys. They're very long-term in the industry."
When ValuJet started a year ago, it served just three cities in Florida with one used DC-9. It has steadily expanded to a 16-city network, all of them connected through Atlanta. It has 13 jets, with plans to buy nine more DC-9s by next year.
ValuJet president Lewis Jordan, one of the company's founders and a former president of Continental Airlines, said ValuJet's natural market is the 40 or so cities within 750 miles of Atlanta. The airline could expand to practically all of them and begin flying some routes that don't connect through Atlanta, he said.
"If you make the price low enough, a certain number of people will fly on an airline, no matter what you do," Jordan said, in an interview in ValuJet's Spartan, rented offices in a suburban Atlanta office park. "But for them to keep coming back, you have to give customers safe, reliable, efficient transportation at a reasonable price."
To pull that off, there's no substitute for the experience of ValuJet's founders. Jordan ran Flying Tigers, a cargo airline, before Continental. Chairman Robert Priddy was the founder, CEO or director of four regional airlines. Maurice Gallagher, the vice chairman and chief financial officer, was a co-founder with director Tim Flynn of WestAir Holdings, parent of another regional carrier.
"We all knew what we were doing," Jordan said.
The simplicity of ValuJet's ticketless travel system is another huge money saver. Major airlines spend tens of millions of dollars annually issuing tickets, reserving seats for passengers and later accounting for revenue at a variety of fares.
Delta, Southwest and United are experimenting with similar methods of giving passengers who've paid for their trip only a confirmation number.
"It's a big savings," Jordan said. "We have a very simple computer system. Once you've checked in for a flight, you go in the category of flown revenue."
Jordan also considers the selection of 25-year-old DC-9 jets a smart move, even though the planes will have to have new, quieter engines put on them soon in order to meet federal noise standards. The planes, ironically, once belonged to Delta, its chief rival in Atlanta.
The DC-9 "is a very reliable airplane," he said. "If properly maintained, it has 50 years of life. There are a number of aircraft-service companies that can take care of them. That means we can get work done on them at very competitive prices."
ValuJet started flying at a time when much larger airlines with relatively low operating costs - including Continental, Southwest and America West - were expanding, and all carriers were trying to cut their costs. Fares on routes across the country have been falling, squeezing everyone's profits except ValuJet's.
The competitive atmosphere has been tougher on other start-up airlines than on ValuJet. They have come and gone. Some with grand plans, even if they have obtained permission from the U.S. government to operate as an airline, have yet to find the financing needed to get into the air at all.
Eastwind Airlines of Philadelphia is in the latter category. It obtained a U.S. Department of Transportation certificate last year and said it would launch service from Philadelphia to Atlanta, Boston and other East Coast cities. It never started operating and recently said it is raising money to try to start scheduled service out of Trenton's Mercer County Airport.
Among the new airlines, Kiwi, based in Newark, N.J., and Reno Air, based in Reno, Nev., are marginally profitable. But unlike ValuJet, Kiwi's and Reno's low fares are all matched by other airlines.
ValuJet has been fortunate that Delta, which dominates the Atlanta air- travel market, matches ValuJet's fares on only a few seats on flights that operate at about the same time as ValuJet flights. Because it has higher operating costs than ValuJet, Delta would only lose money if it did too much discounting against the litte upstart, analysts said.
"ValuJet is not going away," Kidder Peabody's Buttrick said. "Nothing Delta does is going to make it go away. Certainly if Delta chose to be more competitive, ValuJet's margins would be negatively impacted, but it would not make ValuJet unprofitable."
ValuJet bases its pricing policies and its style of handling passengers on those of Southwest, the prototype of a profitable airline with low operating costs. Both airlines keep fares simple and uniformly low.
On ValuJet, tickets are nonrefundable once you've bought them, but they don't require a Saturday night stay away from home. There's a discount for buying a nonrefundable ticket two weeks in advance, but it's still cheap if you buy the day you fly. You can connect through ValuJet's Atlanta hub to far- flung cities in Florida, the South and the Southwest.
In another similarity to Southwest, ValuJet crews joke with passengers and have them play games in flight. The employees actually seem happy you chose their airline.
On Kulp's flight from Philadelphia to Atlanta, a very affable Capt. Jim Giles welcomed passengers aboard as the plane was being pushed back from the gate. He introduced the flight attendants as "the very suave Ken, the very wholesome Heidi and the very lovely Monica."
Like many ValuJet employees, Giles is a former Eastern Airlines pilot and proud of the experience he and others brought to the company.
"The first 34 pilots ValuJet hired had an average of 15,000 hours of flying time," Giles said after the flight. "I have 16,000 hours, 6,000 of them in DC-9s. People look up on the flight deck when they get on a plane, and they like to see a little gray hair in that left seat. I like to see it myself when I get on a flight."
