Travelers Rushing to Cash In on Bargain Air Fares : But the Industry Frets Over the Financial Impact

Bargain-hungry travelers jammed telephone lines and overloaded computer reservations systems on Thursday in an overwhelming response to a summer half-off sale on vacation air fares.

While consumers hailed the temporary fare cuts as long overdue, airline officials and investors worried about the financial pain the promotion would inflict on the industry. Airline stocks fell on Wall Street, and some analysts said the industry might suffer another year of losses.

“Certainly we are coming close to writing off 1992 as a rebound year for profitability,” said Samuel C. Buttrick, an airline industry analyst at Kidder, Peabody & Co.

One day after American announced its half-off promotion fares, the entire reservations system seemed to sag under the response. Some customers spent 30 minutes trying to break through clogged airline reservation lines, computer reservation systems shut down periodically because of the overload, and travel agents contemplated longer hours to handle the crush of business.

“It’s kind of crazy,” said Barbara Hemberger, a spokeswoman for Carlson Travel Network in Minneapolis, which has 2,100 offices worldwide. “Everyone seems to very, very busy. A lot of them are expecting it to be even busier tomorrow.”

One travel agent said it was too soon to tell how the surge in airline travel might affect Southern California tourism, which suffered a severe downturn in the wake of the recent civil unrest in Los Angeles.

American’s half-off promotion, which was matched by rest of the industry, runs through June 5. Tickets, which require a Saturday night stay-over, must be purchased at least seven days ahead of travel and be used by Sept. 13.

The promotion brought a flood of new reservations and throngs of customers who rebooked flights to take advantage of the lower fares. From Los Angeles, travelers were quoted round-trip fares ranging from $200 to New York, $150 to Chicago and $145 to Seattle.

“You are kidding,” one doubting customer told Associated Travel Services agent Val Denise after being quoted a $140 round-trip from Los Angeles to Baton Rouge, La. “There are five of us. We are all going.”

In some cases, the fare changes came so quickly that airlines goofed, offering bargains they had not intended. United, for example, at one point was selling a round-trip between Los Angeles and New York for $169 before increasing the fare to $200.

Consumers gleefully described their savings and pondered taking additional airline trips they had written off as too expensive.

Dolores Blanton of Alta Loma was going to pay $560 to fly herself and her husband to Oklahoma City in June until her travel agent told her about the lower fare. Now, the Blantons will pay $280 and use some of the savings to buy a third ticket for their daughter.

“It’s great--they should do it more often,” said Blanton, an administrator at a high-technology firm. “We were thinking of (other) places to take our children this summer.”

At the Uniglobe Regency Travel agency in Rancho Cucamonga, busy agents took down the names and numbers of new customers so they could first handle the load of calls from established clients.

“They are very pleased” by the prices, said Uniglobe Regency President Jim M. Roberts. “One customer said to me, ‘Gosh, I have been waiting for this all year to happen.’ ”

Travel agents said there were no major problems finding available seats at the reduced fares. But the limited supply of half-fare seats, which fluctuates from one airline to another, could shrink dramatically in the days ahead. Some travel agents said they were having some difficulty locating seats on flights to major cities during the July 4 holiday period.

Although the half-off promotion will fill seats, many in the industry were bracing for the impact the sale would have on already battered airline finances.

“You are clearly going to generate a windfall of booking, but the price levels are going to be so low that the net impact on revenues will be negative,” said Buttrick at Kidder, Peabody & Co.

Wall Street shared Buttrick’s concern. On the New York Stock Exchange on Thursday, AMR Corp., the parent of American, fell $2 a share to $61.625; UAL Corp., the parent of United, fell $4 to $113.75; Delta fell 62.5 cents to $57, and USAir Group dropped 75 cents to $12.125.