Continental Drastically Cuts Fares for 3 Days

In a one-shot effort to sell tickets during the summer doldrums, Continental Airlines on Sunday launched what could become a short-term fare war by dramatically cutting prices on round-trips beginning later this week.

The airline will charge a flat round-trip fare of $152 for some seats on nearly all of its 1,400 daily flights. To qualify for the fare, travelers must leave this Thursday, Friday or Saturday but they may return any time they like, beginning Sunday.

United Airlines responded to Continental’s announcement by saying that it will match the fares in all markets where the two carriers compete. Other airlines either could not be reached for comment or said they were still considering the fare cuts.

Big Savings

With the one-time discount, a round-trip flight between Los Angeles and Newark, the airport Continental serves in the New York metropolitan area, will cost roughly half of the lowest “MaxSaver” fares. These round-trip fares normally range from $278 to $318, depending on when they are scheduled. A full, unrestricted one-way coach fare between the two cities costs $588.

Continental said a family of four traveling between Boston and Los Angeles would save $744 from the lowest fares currently available. The fare would be $608 instead of $1,352 for the same travel on a regular discount ticket.

Continental said it is offering the “Spirit of ‘76” fares--the price will be $76 each way--partly because it expects business travel to be light this week, with the Independence Day holiday falling on Tuesday. The airline said it is making more than 200,000 seats available at the low fares during the three-day sale period.

Although airlines do not reveal the number of seats allocated to cut-rate fares, Ned Walker, a Continental spokesman, estimated that the average flight would carry about 50 passengers on the new low fares. Thus, on a Boeing 727 flight, for example, more than a third of the seats will be allocated to the promotional fares. Continental’s DC-9s carry about 100 passengers and its Boeing 747s have seats for about 400 passengers.

Unlike the MaxSaver fares pioneered by Continental in 1987 and matched by all of the other carriers, the “Spirit of ‘76” fares carry no restrictions, though they are not refundable. A traveler must make a return trip reservation at the time the ticket is purchased this weekend. However, for an extra $75 for each round-trip ticket, the return travel date may be changed. This would make the round-trip fare $227, still lower than the nearest low fare in many cases.

“This may be a move by Continental to get the consumer to believe that low fares are not gone forever,” said Paul Karos, airline analyst with First Boston Corp., a New York brokerage house.

“There will always be promotions like this to fend off the backlash of travelers who are unhappy about higher airline fares.”

Karos added that “there is clearly elasticity in the industry when it comes to fares. As fares go up, the number of passengers comes down.”