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U.S. Airlines Slash Fares to Encourage Winter Travelers

From Associated Press

U.S. Airlines, still staggering from the recession, announced fare sales Tuesday that they hope will lure more passengers during the winter, when business historically has been the slowest.

Despite some fine-print limitations, the discounts promise savings of hundreds of dollars on destinations many potential fliers may have dismissed as unaffordable in these tight economic times.

But industry analysts said the tickets are so cheap that airlines cannot make money on them, and are largely a way for the carriers to cut their losses.

USAir was a main catalyst for the discounting, offering domestic fares for as low as $138 round trip. Trans World Airlines offered half-price international business fares, although Northeast travelers won’t be able to exploit them because that competitive region is excluded from the promotion.

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The nation’s two largest air carriers, American Airlines and United Airlines, quickly said they would match the USAir sale, but were still studying TWA’s offer.

Selling cheap seats to business travelers is particularly painful for the airlines, because those travelers pay the most and tend to travel regardless of price.

“Carriers like American make money from international operations, so they’ve got to think hard about that one,” said Mark Daugherty, a securities analyst who follows the airlines for Dean Witter Reynolds Inc.

Continental Airlines said it would match both sales, although it was excluding Houston-London and Denver-London because the airline believes that it could lose too much on those routes.

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Other major carriers, including Delta, Northwest, Pan Am and America West, said they were scrutinizing both offers.

The sale comes as the airlines are concluding another devastating year, after the record losses absorbed in 1990. Pan Am, America West, Continental and Midway are all operating under federal bankruptcy court refuge, and TWA has said it plans to seek similar protection next year.

Throughout these troubled times, healthy airlines have accused their weaker rivals of slashing fares to drum up more business.

“I think it’s just a sign of a weak economy and overcapacity in the industry and, in some cases, financially troubled carriers,” Daugherty said. “All that adds up to uneconomic pricing. It’s good for the consumer, but it’s bad for the airlines.”

The USAir sale offers savings of 10% to 25% off the cheapest discount tickets. The fares range from $138 round trip on journeys of up to 301 miles each way, to $438 round trip on journeys of 1,751 miles or more each way.


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