Big Airlines Reduce Some Fare Discounts

In an attempt to boost profits during one of the worst slumps ever, the nation’s major airlines raised the price of business travel fares purchased seven days in advance.

The approximately 6% increase results from the decision by United, American and other major carriers to cut the discount to 15% from 20% off the regular unrestricted coach fare effective Oct. 28. Last month, the airlines eliminated the discount on tickets purchased three days in advance, a strategy adopted last spring when carriers faced a dearth of travelers during the Gulf War and recession.

“Many of our corporate customers think they are paying too much already and this is not bound to make them happy,” said Tom Nulty, president of Associated Travel Management, a Santa Ana-based travel agency.

But Nulty and other observers don’t expect many business travelers to alter plans because of the change. The lower discount will add about $60 to $70 to the price of a round-trip coach seat between Los Angeles and New York.

“These fares are relatively price insensitive,” said Daniel A. Hersh, an airline analyst at the Kemper Security Group.

Only one airline, Trans World Airlines, refused to follow the industry. Instead, TWA said it will continue selling its business saver coupon program through Oct. 30.

The airlines have been scrambling for ways to raise revenue to cover rising operating costs. New labor contracts and costly new aircraft and route expansions have contributed to rising expenses, and industry leaders have complained that prices are now too low to generate suitable profits.

“This is good news for the airlines,” said Ed Starkman, a Paine Webber analyst. “This industry needs to enhance revenues.”

Airline passengers, including leisure travelers, may expect higher fares and smaller discounts if the economy continues to recover and carriers seek to cover higher operating costs, analysts said.

However, leisure travelers might be more resistant to accept higher fares and fewer discounts. “They can spend their money on additional things instead of travel,” Nulty said.