2nd Summer Air Fare War Breaks Out : Airlines: But the discounts--10% to 35%--won’t be as deep as the previous round’s 50%. And only certain routes are involved.

The nation’s airlines on Thursday reluctantly plunged into the second air fare war of the summer, cutting the price of vacation tickets 10% to 35%.

But travelers will find that the latest cuts, launched by Continental Airlines, pale in comparison to the 50% summer fare sale that overwhelmed the airline industry last month. One reason, analysts say, is that most discounted seats on heavily traveled routes and days may have already been sold.

“There are some, but not a lot” of seats on sale, said a spokesman for American Airlines, which matched the Continental fare cuts.

But the fare cut also foiled industrywide plans to raise fares, beginning today. Instead, the airlines said they will postpone the increases until July 18, a day after the fare sale ends.

The current discount applies to the airlines’ regular vacation fares, which must be purchased seven days in advance of travel and require a Saturday night stay-over. Tickets must be purchased by July 17 for trips completed by Sept. 15.

American, United, USAir, TWA and America West lowered their prices on routes where they compete with Continental.

Unlike the previous 50% fare sale, this week’s cut applies only to certain routes. Continental said discount seats are available in about half its 9,000 markets. Lower fares will not be available for travelers flying out of Houston or the New York-Newark airports, where Continental said it sold out much of its inventory of discount seats in the previous fare cut.

The limited supply of seats will make it harder for travelers to take advantage of the cut. The airlines can expand the supply of sale seats, but they risk squeezing out full-fare passengers and losing the loyalty of frequent fliers who can’t find a seat.

“I just hope that there is enough room for them,” said Thomas Nulty, president of Associated Travel Management, a Santa Ana-based travel agency.

Some airlines also slapped restrictions on passengers who want to exchange previously purchased tickets at the lower fares. America West prohibited the practice, and TWA will refund the difference only in the form of vouchers good for future travel.

The limited nature of the fare hike and smaller supply of available discount tickets will soften the financial blow of the sale, said industry analysts. While the last fare promotion resulted in the sale of more than 10 million seats, the low prices ate into the fat profits the carriers traditionally enjoy during the peak summer months.

Many industry officials were relieved at American Airlines’ decision to match the Continental cuts and not exceed them. Earlier this summer, American sent the industry reeling when it cut vacation fares in half after Northwest Airlines allowed adults to travel free when accompanied by a child.

“While the airlines are matching fares, it’s actually not going to do much more (financial) damage,” said Harold Sirkin, a transportation specialist at Boston Consulting Group. “A lot of the seats have already been taken.”

Continental restricted the number of discount seats available during the first sale, holding back the inventory until the current promotion. By selling seats now at an average discount of 25% instead of 50% during the previous sale, Continental will generate more cash as it attempts to emerge from Chapter 11 bankruptcy court protection.

“Continental will disproportionately collect new bookings,” said Samuel C. Buttrick, an airline industry analyst at Kidder, Peabody & Co. “It’s a pretty smart move.”

With the latest discounting, industry observers say it will be harder than ever for carriers to raise prices now.

“They keep saying they are going to raise fares,” said Joe Brancatelli, executive editor of Frequent Flyer magazine. “The average American no longer has a sense of what an airline ticket should cost. If they wait long enough, a loony tune will offer a $200 fare coast-to-coast. People have been conditioned to wait for the next sale.”