Air-Fare War Takes Off on Routes in State

A fare war broke out Thursday among airlines serving major California cities, giving consumers discount air fares not seen since the days before PSA and AirCal were bought by major carriers.

The intensified competition in the nation’s busiest air corridor between Southern and Northern California came as American Airlines slashed fares and other big carriers said they will match them.

American’s new discount fares--as low as $29 one-way between Northern California and Ontario Airport in San Bernardino County--spurred other big carriers, including USAir and United Airlines, to say they will match them.

‘We Will Match It’

“Where we compete with American, we will match it,” a United spokesman said. USAir said it would announce details of matching fares today.

American is not the first carrier in recent months to announce low fares on limited routes in the California market. But American’s announcement is the first wide-scale price cut, particularly on the Los Angeles-to-San Francisco route. Its new fares go into effect May 1.

American put most emphasis on its $98, seven-day advanced purchase, round-trip fare from Los Angeles International, Burbank and Orange County to San Francisco or San Jose. Those are the most popular routes that “we think peo ple will pay attention to,” American spokesman Ed Stewart said. Those routes will also feature a new, one-day advanced purchase fare of $118 round trip.

Currently, the lowest seven-day advanced purchase fare for major carriers flying between Los Angeles and San Francisco is $124 round trip. The regular unrestricted fare is $296 round trip.

“This is best for the average person, and the smaller companies on very tight budgets will obviously benefit,” said Gordon Erenberg, manager of the Ask Mr. Foster travel agency in Century City.

Business travelers--the most frequent fliers along the busy routes--were among the most vocal last winter when major carriers raised fares. In particular, some businesses were pleased to see a cut in the rate for one-day advanced purchase. “It’s better than it was; it’s been costing us $296,” said Nancy Godfrey, travel manager for Chevron Oil Co.

“If the client is flexible, how can you beat it,” said Marilyn Rosensweig, an agent with Century 21 Travel in Tarzana. Passengers always benefit from discounting that affects several airlines, she said, “but the problem is with people who buy tickets in advance and have to cancel. The rules are so restrictive and they don’t always remember what you told them about the restrictions.”

Mike Heffer, senior staff member of San Francisco-based Consumer Action, said the fare restrictions dampen the good news somewhat because many people traveling between San Francisco and Los Angeles can’t make advanced reservations, but “we certainly welcome any sign of price competition in the San Francisco-Los Angeles market. It’s been a long time coming.”

There are more than 200 flights a day between Northern and Southern California, shuttling thousands of people between the state’s population centers.

While most carriers are expected to match the fares, airline industry analysts said they do not believe that the discounting signals the beginning of a protracted and vicious fare war.

“Everyone loses in a fare war. No one is more conscious of that than American,” said Edmond Greenslet, an analyst with ESG Aviation Services in Greenwich, Conn.

“This is a local tactic, not a broad-based strategy,” he said, explaining that, generally, air fares are rising throughout the nation.

American has a smaller share of the intrastate market than United or USAir, he said. “American is under no illusion that they won’t match the fare, but the advantage is that it gives American name recognition and it buys them good will,” he said.

American has also recently established a new hub at San Jose in an attempt to make it an alternative to San Francisco, he said. The fare announcement is “part of a marketing strategy to heighten attention to San Jose,” he added.

American’s Stewart said, “The bottom line is that this is what our marketing folks said we had to do to remain competitive.”

The first fare cutting began with Dallas-based Southwest Airlines. It announced a $98 unrestricted, round-trip fare, beginning on May 15, for flights between Ontario and Oakland and San Diego and Oakland. It will also offer a $58, 21-day advanced purchase ticket for those routes.

American’s announcement is “their reaction to our introductory fares,” said Charlotte Goddard, a Southwest spokesman.

In addition to the other reductions, American is matching Southwest’s fares with the $58, 21-day advanced purchase ticket between Northern California and Ontario, and between Orange County and San Jose.

It will also offer an unrestricted $198 round-trip fare between Burbank and San Jose; Los Angeles International and San Francisco or San Jose; and from Orange County to San Francisco or San Jose. However, the fare will be available for only a limited number of seats on each flight, Stewart said.

California consumers have seen steadily increasing rates for intrastate travel since USAir bought PSA and American bought AirCal in 1987. Rates rose throughout the country as deregulation spurred a wave of airline mergers, decreasing competition. When PSA was purchased, consumers could buy a full-fare, round-trip ticket between San Francisco and Los Angeles for $140.

In addition to increases last year, the major carriers in January raised fares an additional 15%, bringing the regular Los Angeles-San Francisco round-trip fare to $296.