Air Carriers to Increase Some Discount Fares

In the first major change of fares since the airline industry restructured its ticket price schedules last November, American Airlines said Thursday that it is increasing discount fares out of its Dallas/Ft. Worth hub by as much as $40 per round trip.

Most other airlines said they would match the increases.

The new fares, which will affect only 40 of American’s 5,000 routes, are apparently a reflection of excellent business. “We analyzed the markets and found that we were not earning what those markets were worth,” said Mary O’Neill, an American spokeswoman. “Thus, it seemed appropriate to take this action.”

Fares on 20 American routes to the western United States will rise effective with tickets purchased today, while increases on flights to other parts of the country will go into effect Feb. 1. The price of longer trips--such as Dallas-Los Angeles and Dallas-San Francisco--will rise by $40, but tickets for shorter flights--Dallas-Cleveland, for example--will be raised only $20 per round trip.

The fare between Dallas and Los Angeles, for example, will rise from $258 to $298 at “off-peak” times, the airline said, and from $298 to $338 for flights at peak times. Dallas-Cincinnati will rise from $238 to $258 off-peak and $278 to $298 peak. (The period from noon Monday to noon Thursday is considered off-peak by the airlines.)

The fares being increased are on discount tickets carrying significant restrictions. Reservations must be made at least 14 days in advance, and the tickets must be paid for within 24 hours of making the reservation. A Saturday night stopover is also required.

Analysts said they do not think that the increases portend across-the-board price hikes by the nation’s airlines, but they said the moves are significant in that they were taken during what is generally the bleakest part of the business year for the airline industry.

“Any (increased) fares you can get in January have to be considered positive,” said Raymond Neidl, airline analyst with the New York research firm of McCarthy, Crisanti & Maffei. “This is traditionally the slowest month of the slowest quarter,” he added. “Now we have to see if they can make these new fares stick. What American is telling us is that traffic and (advance) bookings are stronger than it had been thought they would be.”

Louis Marckesano, airline analyst with the Philadelphia brokerage of Janney Montgomery Scott, said the new fares “will have a meaningful effect on the bottom line of the carriers.”

American quietly put the fare changes into its computers late Tuesday, but did not make a general announcement. As a result, the move was not generally noticed until Thursday.

In November, Continental Airlines initiated--and others matched--a restructuring of fares to make them more representative of distance traveled. Some fares were raised, others were lowered and some were not changed.

American said Thursday that its new increases will affect only fares that were lowered in November. O’Neill said that on 27 of the 40 routes, fares will still remain lower than they were before November’s changes. Five fares will rise to the same level and two will be above where they stood in November. On six routes there were “splits”--off-peak tickets will cost a little more but peak fares will drop slightly.

AMERICAN HIKES FARES

American Airlines is increasing some of its discount fares. Here are sample rates from Dallas/Ft. Worth International Airport to the West Coast during peak travel periods.

Destination Pre-November Current New Los Angeles $338 $298 $338 San Francisco 344 318 358 Ontario 378 298 338 Burbank 388 298 338 Orange County 368 298 338

Source: American Airlines