TRAVEL All's war in airlines' fares, and analysts don't love it
The ailing industry needs fare increases to recover, industry watchers say.
KNIGHT RIDDER NEWSPAPERS
The first fare war of 2003 has erupted as the major airlines rush to fill seats during what are traditionally the slowest travel months of the year.
American Airlines, United Airlines, Southwest Airlines and others have rolled out or extended big sale promotions, offering substantial discounts on leisure fares during the first few months of the year.
"Southwest Airlines doesn't care if you've been naughty or nice!" the Dallas-based low-fare carrier crowed in a statement. "Santa has wiped his slate clean."
The sale shows that the big carriers aren't ready to start pushing up prices, which some analysts and airline executives say is essential to an industry recovery.
"Revenue recovery simply must occur if 2003 is going to be a better year," said analyst Jamie Baker of J.P. Morgan Securities.
During the past year, air fares have fallen to the lowest level in decades amid heavy competition among major carriers and low-fare airlines such as Southwest and JetBlue. At the same time, the carriers have experienced a dramatic drop in the number of business travelers, who traditionally buy the most expensive fares.
That's one of the primary reasons the industry is expected to report losses of more than $8 billion in 2002.
American, based in Fort Worth, Texas, has been experimenting with a simplified price structure in 400 markets that includes cheaper business fares and more expensive leisure-ticket prices. But the carrier has yet to expand the test significantly across its network.
Despite the financial crisis, the airlines are desperate to get passengers in the air, even if it's at the cheapest prices. The first three months of the year are traditionally the slowest for the airline industry, and the possibility of a war with Iraq in the coming months has only increased their desire to sell tickets now.
Airline executives urged passengers to buy tickets fast.
"We suggest customers book early to get the best selection of seats to their favorite winter and spring vacation spots," said Dan Garton, American's executive vice president of marketing, in a statement.
Some of the fare deals:
UAmerican is offering discounts of up to 40 percent off leisure fares on more than 200 domestic and international destinations. The fares, which must be bought by Jan. 20, are available for travel until May for domestic and Mexican destinations, through June for Caribbean cities and through March for Latin American and most European cities.
USouthwest is selling fares in select short-haul markets as low as $34 each way, and in some long-haul markets as cheap as $89 each way. The tickets are on sale though Jan. 20 and are good for travel dates before June.
UAmerica West Airlines is offering deals to selected cities that are 50 percent to 70 percent below what most other major carriers are offering without a Saturday-night stay requirement.
UUnited Airlines is extending an ongoing fare sale to Jan. 10, which includes one-way fares as low as $56 to $127 each to selected domestic and international markets. Domestic fares are good through May, and international fares are good through March.