Continental Unit Unveils 70% Fare Cuts : May Set Off Price War in Flights Between L.A., Bay Area, Seattle

Continental West, a new division of Continental Airlines, set off what appears to be a temporary fare war along the West Coast air corridor when it announced Wednesday that it would soon begin service between San Jose, Los Angeles and Seattle with fares as much as 70% lower than those of other carriers serving those cities.

Among the competing airlines on those routes are Western, United, PSA and AirCal. PSA and AirCal quickly said they would match Continental West’s fares on a limited basis. Western said it would, too, but gave no specifics. United said it was studying the Continental West fare schedule.

Any fare war will not last long because there can be no winners, according to airline industry observers.

‘Not Too Popular’

“Fare wars are not too popular around here,” said Paul W. Salazar, airline analyst for Crowell, Weedon & Co. in Los Angeles. “It will probably not last too long. Any incremental business Continental West takes away from the dominant players is temporary. In such a situation, everyone comes down to match (the lowest fares); then there is a status quo; then nobody makes any money and everybody raises the fares again.”

Los Angeles-based Continental West said that, from next Thursday, when it launches its service, through Sept. 14, all seats between Los Angeles and San Jose will cost $29 and seats between Los Angeles and Seattle will be $69, all without restrictions.

After Sept. 14, the $29 fare on the San Jose route will apply to off-peak hours, and seats during peak hours will rise to $45. On the Seattle route, the off-peak fare will stay at $69 and the peak-hours fare will rise to $99.

Fares Vary Widely

Continental West, with new Boeing 737-300s, will operate six daily round trips between Los Angeles and San Jose and three daily round trips between Los Angeles and Seattle. On Sept. 15, the new airline will launch service between San Jose and Seattle with two round trips a day. Fares will be $59 in off-peak hours and $79 in peak hours.

Current fares between Los Angeles International Airport and the San Francisco Bay Area vary widely and change frequently but generally range from $49 to $79. The typical coach fare from LAX to Seattle is $210. The typical coach fare from San Jose to Seattle is $175.

AirCal, which has eight round trips a day between Los Angeles and San Jose and three between San Jose and Seattle, said through a spokesman that it will match all of the lower fares but only on a limited number of seats.

“We don’t intend to let any competitors move in and get an advantage either in prices, schedule or service,” the spokesman said. “We are the No. 1 carrier out of San Jose. “Past history has demonstrated that no one wins in a fare war and that generally the new carrier has the least to gain.”

PSA also said it will lower prices on a selective basis to match Continental West’s. William E. Hastings, director of public relations, said he does not feel that Continental West can make money at the fares they will offer and “nor can anyone else. But we have the staying power in the market, and we are going to be very aggressive.”