Business-Class Fliers Are Still Paying More : Airlines: Price wars have benefited leisure travelers while the struggling industry hiked fares for corporate customers.

Discounted airline fares have turned this into an especially happy holiday season for leisure travelers. But business travelers may feel as if they’ve gotten a lump of coal.

Fares for business travel have risen at least 15% during the last three months, according to USTravel. Analysts say that the struggling airline industry, which has been engaged in a price war for much of the year, is trying to lay some of its burden off on corporate fliers.

That strategy could cause some companies to cut back on air travel, analysts conclude.

“The dilemma is a tough one,” said Donald S. Garvett, an airline industry consultant in the New York office of Simat, Helliesen & Eichner. “Existing prices are not high enough to cover costs. But airlines are very dangerously close to testing the price resistance level of consumers, particularly business customers.”

Airline prices have actually risen for all fliers. Last week, for instance, most airlines raised fares by $10 to $30 in the third industrywide increase since September. But the hikes have been masked by ongoing fare wars and discounts targeted to leisure travelers.

The lowest regular discount fare between Los Angeles and New York is now $530--up from $460 in April. However, thanks to temporary winter sales, travelers can fly that route for $348.

Travel agents have been busy trying to sort out the price hikes and the discounts that appear to occur simultaneously. Last week, in addition to a price hike that took effect, several carriers proposed raising first-class and coach fares by $10 to $40 by Dec. 17.

Meanwhile, the airlines also extended a 30% winter fare sale on many routes and rolled out a new set of discounts for weekend travel.

The frequent discounts that have shielded vacation travelers from fare hikes have been of little or no relief for business fliers. Discount fares often carry restrictions--such as a Saturday night stay-over--designed to weed out business travelers, who often travel on short notice and during the work week. Corporate discounts are often available, but usually apply to only large companies.

With encouraging economic signs surfacing recently, the airlines are gambling that passengers can absorb the increases without much grumbling.

“Corporate travel has been cut, (but) the airlines hope that the business traveler comes back as the economy” strengthens, said Jay Anderson, vice president of USTravel.

Jim M. Roberts, president of Uniglobe Regency Travel in Rancho Cucamonga, says his business customers have become resigned to the rising fares even though airline discounts are raining down around them. “You hear a sale and know it doesn’t apply to you,” he said.

Resentment among business travelers could rise as their fares increase and discounts for vacationers continue.

The airlines “may have offended their core clientele and reduced some brand loyalty,” said David Lodigiani, a managing partner in the New York consulting firm of Towers Perrin. “It doesn’t look good for airline profitability and the business traveler in the short term.”

Business travelers can take some comfort in the fact that the airlines have not been able to raise fares as fast as planned. Disagreements about strategy and weak demand forced the postponement of some price hikes. Meanwhile, airlines have kept extending sales.

“After New Year’s, we could see another air fare war that will take us through March,” said Tom Parsons, editor of Best Fares magazine.

Air Fare Hikes Airlines have boosted air fares three times since September and are planning another hike this week.

Date Fare Increase Sept. 10 $30 Sept. 20 $10-$30 Dec. 9 $10-$30 Dec. 17 $10-$40*

*Proposed increase would apply to unrestricted coach and first class tickets

Source: USTravel