Bigger Airline Fare Discounts Expected in Fall

Travelers may see larger than normal discounts in air fares this fall as airlines look for ways to stimulate sluggish passenger traffic in the wake of the recession and the Gulf War, industry observers say.

Several airlines have already announced fall discounts on hotly competitive transatlantic routes, and price cuts are expected to spread to domestic routes as well. In fact, on Thursday, Pan American World Airways announced a 25% fall discount for some domestic flights begining Sept. 1.

“I think it’s just the beginning,” said Thomas Nulty, president of Associated Travel Management, a Santa Ana-based travel agency. “I think (the discounting) is going to get much deeper.”

Fare discounts are nothing new during the fall, which is traditionally the slowest time of the year for air travel. But airlines are under even greater pressure this year to boost ticket sales with special discounts and promotions. Even before the traditionally slow fall season, passenger traffic in July was running slightly behind last year’s level, while traffic during the first seven months was down 4.1%, according to the Air Transport Assn., an industry trade group.

“I think we are likely to see the deeper cuts this fall . . . because the U.S. recession will cut back the demand for travel and the airlines will respond with promotional programs,” said Robert Decker, an analyst at Duff & Phelps in Chicago.

British Airways started the current round of fall discounts rolling Sunday when it cut its advance-purchase, transatlantic fares by 15% for travel between Oct. 15 and Dec. 13. Other U.S. airlines matched the cuts, and then Virgin Atlantic airline Thursday reduced its standing discount fare 13%.

Under the British Airways discount, a round trip that begins midweek between Los Angeles and London will cost $598. In comparison, the British carrier’s lowest fall fare last year was $697.

The discount has had the desired effect, British Airways spokesman John W. Lampl said. Sales have been brisk, and the carrier’s reservation agents handled 16% more calls Wednesday than they did on the same day last week.

“There has been a reluctance to travel,” Lampl said. “We are attempting to motivate and attract people to start traveling again.”

But, as is usually the case, the discount fall fares carry restrictions--such as advance purchase and minimum stays--that lock out most business travelers. Airlines traditionally see business travel pick up in the fall after a drop-off in the summer without incentives.

“They won’t be as aggressive with business travel fares as they will be for leisure travel” fares, Nulty said.

And some travel experts argue that the airline’s new, lower fall fares are not all that new. Klaus Billep, president of Universal Travel System, a Santa Monica travel agency, said similar fall deals were available last year through wholesalers who buy large chunks of tickets from the airlines at steep discounts and resell the seats to consumers.

“They are bringing the prices down to realistic levels,” Billep said. “The airlines hope to get those passengers who were undecided and were scared by the higher summer fares.”