United Hikes Air Fares on Most Routes : Other Carriers ‘Study’ Mileage-Based Charges
In a move that could boost air fares industrywide, United Airlines announced on Wednesday a new mileage-based fare structure that in effect raises coach ticket prices on about two-thirds of its flights.
Beginning Aug. 17, the nation’s largest carrier said it will overhaul its fares in the Lower 48 states so that they will be based on the length of the flight. Although many fares will change only slightly, some fares will rise by as much as 30% while others will fall by as much as 32%.
United said it also will add a new class of discount fare, priced at 45% off coach fares, to its two current discount fare classes of 60% to 70% off coach and 30% off coach.
“This new fare structure will result in a more complete and equitable product offering to the consumer” and will “eliminate unfairness in fares,” said John R. Zeeman, United’s executive vice president for marketing and planning, citing examples of shorter flights currently costing more than longer flights.
Industry May Follow
The move, if matched by other carriers, “may result in higher fares in the industry,” said Timothy P. Pettee, airline analyst with the Wall Street investment firm of L. F. Rothschild, Unterberg, Towbin.
The move also represents an attempt by United to regain leadership of the industry’s fare setting from arch-rival American Airlines, the nation’s second-largest carrier, Pettee said. In April, 1983, American adopted a modified mileage-based fare system that was widely matched. American this past January also introduced a new discount fare system.
Extra income from the new fare structure would help United to rebound from a second-quarter loss, due in part to a 29-day pilots strike. The firm’s parent, UAL Inc., on Tuesday reported a loss in the April-June period of $91 million, compared to net income of $123 million in the year-ago quarter.
However, United said its new fares may not apply on many routes, particularly those served by discount carriers such as Continental Airlines and People Express, which offer fares below those proposed by United.
