Continental, Eastern Spark Cuts in Fares

Several big airlines announced seasonal cuts in discount fares on Tuesday in actions industry analysts said were meant to lure more leisure travelers and were unlikely to hurt airline company earnings.

“This is intended to stimulate traffic in a seasonally weak period,” said Kevin Murphy of Morgan Stanley.

Texas Air Corp.’s Continental Airlines and sister company Eastern Airlines started the fare cuts rolling, announcing that they would cut deep discount, or Maxsaver, fares by up to 36% for a limited time. The fares are heavily restricted.

Delta Air Lines Inc., Allegis Corp.’s United Airlines, USAir Group Inc. and Piedmont Airlines said they would match the cuts in markets where they compete with Texas Air’s carriers.

“On a market-by-market basis, where we compete, we’re going to match them,” a Delta spokesman said.

A spokesman said American Airlines will match the fares to compete in the continental United States, excluding Hawaii.

NWA Inc.’s Northwest Airlines was not immediately available for comment.

Aimed at Leisure Travelers

The fare action is basically a seasonal sale on a limited number of seats designed to stimulate traffic, analysts said.

“Texas Air is not going to start a fare war they can’t finish,” Morgan Stanley’s Murphy said.

Airlines have been raising other fares aimed primarily at business travelers. Maxsavers are mostly used by vacationers and other leisure travelers. And Maxsaver fares, which were increased last month because of strong demand, are scheduled to rise again late next month, the analysts noted.

The new Continental Airline fares are good Monday through Thursday, require a Saturday stay, are non-refundable and must be purchased by April 14.

Other restrictions also apply. The sale affects all of Continental’s 92 U.S. markets and about 80 cities served by Eastern, the companies said.