Air fare wars will continue throughout the spring and summer for certain and most likely through the remainder of the year. Fare trends have fluctuated from complexity to simplicity and back again since government deregulation of the airlines was decreed in 1978.
Fares these days come and go as quickly as departures from Chicago`s O`Hare International Airport on a clear day. Travel agents can`t keep up with changes. Airline computer reservations systems can barely keep abreast of the changes. American Airlines` Sabre system, for instance, records 40,000 fare changes a day. So pity the poor consumer who`s trying to understand the nuances of fares to plan a vacation.
As a government consumer information specialist put it: ”Try to explain to the consumer why he can fly from New York to Los Angeles for $99, but to fly from Albuquerque to Tuscaloosa costs $300.”
The philosophy appears to be simple enough: If flights operate with empty seats at nonpeak periods on highly competitive routes, discount the seats and sell them. On routes with little traffic and competition, fares remain relatively high and stable.
The major old-line carriers–American, Delta, United–also have chosen to play hardball with the now equally large companies spawned by deregulation
–People Express and Texas Air. People Express now has under its wing Frontier Airlines; Indiana-based Britt Airways, third largest regional commuter carrier; and Provincetown-Boston Airline, currently in bankruptcy. Texas Air is the parent of Continental Airlines, New York Air and soon Eastern Airlines, last year the nation`s third largest carrier.
Fortunately for the consumer, low fares, dropping fuel prices (from more than $1 to 80 cents a gallon) and overcapacity make flying very attractive to the vacationer with flexibility. Depending on where you live, it`s almost cheaper to fly than to drive or take a bus.
The latest salvo in fare wars was fired last month by American Airlines, which said it would offer discounts as much as 75 percent below regular coach fares between April 1 and May 22. United, Delta and others responded to meet the competion. American spokesman Joe Stroop explained:
”The simple answer is that you have to respond to the competition. When the low-cost carriers tried to get a foothold in the marketplace–People Express in 1980, Continental and Braniff in 1982–the major carriers ignored them and hoped they would go away,” he said. ”They didn`t. Now you have to offer something competitive.
”We are trying very hard to become a low-cost carrier, too, over time and through growth. We want the public to know it doesn`t have to go to a low- cost carrier to get a low fare. You gamble, but you don`t cut fares so low that you lose money. You have to manage your inventiory. You don`t sell every seat at the same low fare.
”I can`t make predictions as to fares, but I think the reason for the low fares is competition, pure and simple. We don`t think the competition is going to be lessened in the near future. For the consumer, air travel will continue to be a bargain for a very long time.”
American`s round-trip fares from Chicago, with ”Q” fare restrictions, vary from a low of $58 to Dayton, Detroit, Ft. Wayne, Grand Rapids, and Milwaukee to $218 to Oakland, Sacramento, San Francisco, San Jose and Santa Barbara.
The lowest fares instituted by American and others revolve around the deeply discounted, capacity controlled ”Q” fares that require 30-day advance reservation and ticketing and carry a 25 percent cancellation or change in reservation penalty. The ”Q” is the lowest of the fares that include first class, coach, ”M” and ”B,” the latter two less discounted than the ”Q.” Within three weeks after American fired its shot, People Express returned with its own blast. Last week People said it will cut fares to eight Florida cities, but this time restrictions accompany the new prices. Some airline analysts said that could mark a change for the airline with the bare-bones reputation and no restrictions.
People said $49 one-way tickets will be available from Newark to the Florida cities for two months beginning April 1 if the seats are paid for 14 days in advance with a major credit card. From Chicago, the round-trip fare to the Florida destinations would be $256 off-peak or $296 peak, said Russell Marchetta, People spokesman.
The fare will apply to 70,000 seats on flights to Ft. Lauderdale, Ft. Myers, Melbourne, Miami, Orlando, Sarasota, St. Petersburg-Tampa and West Palm Beach.
Marchetta said the company had not decided whether to extend past May the Florida restrictions or the $49 fares, which usually are $69 to $149, depending on the flight time and city served.
Asked whether the airline is considering adding the advance payment provision to other flights, he said, ”It`s something we`re looking at.”
Where will the fares go beyond the most recent changes?
”It`s a hard thing to say in today`s market,” said Robert Mulvey, Delta`s district marketing director. ”Delta will match fares to retain market share, but when you start to lose money on them, you take another look. The economics is to make a profit.
”We`re competive. We`ve matched American and United, basically in the
`Q` fare area,” Mulvey said. ”Each carrier looks at it the same way: to retain market share. Business will grow and Delta will participate.”
The lowest fares, available mainly on Tuesdays and Wednesdays, will encourage vacationers to plan for midweek departures rather than the normal weekend getaways.
John Zeeman, United Airlines` executive vice president for marketing and planning, assessed the fare changes this way:
”This should be a super summer to see the United States. I don`t know if the fares will stay as low as they are, but they`ll be close,” he said.
”We`ll see attractive fares throughout the year, at least all spring and summer. They might go up $10 to $20 one way.”
Zeeman explained the excessive capacity in the marketplace: ”It stems from expansion within its major hubs (cities) and the fact that it can hire people at lower salaries under new union contracts that allow United to compete with the newer, low cost carriers.”
”A lot of us are expanding rapidly. We are adding a lot of lift. United is developing a hub at Washington`s Dulles International Airport and expanding its operation in Denver. With our new service to the Pacific, we are adding new routes to feed them.”
In addition, Zeeman said United is being price competitive with Continental Airlines, People Express and New York Air and has lowered its fares to Hawaii. ”All of us have to recognize we can`t let anyone charge lower fares.”
Depending on where you live and the competition that exists determines how good a deal you can get. For instance, all of United`s fares out of Denver are nonrestrictive because Continental and People Express operate without restrictions. So if you live in Denver, you have it made.
The Chicago market, however, is more controlled because United, American and Delta have a large share of flights without the intense competition from Continental and People Express. Nevertheless, Chicago does have its share of bargains.
American`s Stroop summed it up: ”I don`t think there will be anyplace in the country immune from deregulation. We`re convinced that low fares are here to stay.”
