Cut-Rate Fares Lure Fliers to California Skies : Airlines Report Surge Over Holiday Weekend

A three-year agreement by airlines to keep fare prices level in the busy California air corridor has ended, and the passengers filling up planes to take advantage of the low rates couldn’t be happier.

The cut-rate fares returned last Friday, with newcomer Continental West offering seats for as much as 70% below prevailing rates. The other major regional carriers--PSA, AirCal and United--responded with comparable cuts.

Fares between Los Angeles and the San Francisco Bay Area plummeted to $29 from an average of $79. Continental West also shoved down fares on the Los Angeles-to-Seattle route to $69 instead of the average $210.

Passengers took advantage of the inexpensive flights for the Labor Day holiday. Airlines reported that planes were flying about at 90% or more of capacity, instead of the usual 70% to 75%.

Mike Cinelli, a spokesman for Continental West, a subsidiary of Houston-based Continental Airlines, was enthused by the response.

“We see ourselves becoming a major player on the West Coast. . . . We anticipate looking at other markets, and we hope to expand cautiously,” Cinelli said.

6.6 Million Passengers

The California corridor is made up of eight airports--Los Angeles International, Burbank, Ontario, Long Beach and Orange County’s John Wayne in the south and San Francisco, Oakland and San Jose in the north. The corridor is one of the busiest in the nation, with 6.6 million passengers a year.

When Continental West declared the war, it also imposed a cease-fire date of Sept. 14. After that, fares will return to normal in peak hours, although bargains may still exist during off hours.

Spokesmen for airline companies bemoaned the new competition, recalling how three years of fare wars after deregulation in 1978 nearly bled the airlines white. In the ensuing years, airlines purchased more fuel-efficient planes, won wage concessions from unions and cut some routes to stay afloat.

“We’re certainly not going to be making any money at these rates, and I can’t believe that Continental West is either, even with their lower labor costs,” said Margery Craig, spokesman for San Diego-based PSA, the biggest carrier in the California corridor with about 47% of the market.

Rick Russell, marketing director for Newport Beach-based AirCal, agreed. “No one will make money even if all the seats are sold. Maybe you can break even.”