Southwest Triggers Fare War in Interstate Flights


Southwest Airlines announced a 50% fare cut Wednesday, firing a cannon at United Airlines just days before United is to start its competitive, low-cost Shuttle service.

By starting a major fare war, Dallas-based Southwest is making clear its intent to defend its turf from upstarts seeking to chip away at its dominance of the short-haul, low-fare market.

Already dealing with a series of selected fare cuts this fall, other carriers, including Shuttle by United, American Airlines and Continental Airlines, said they would match the new Southwest fares on competitive routes.

Previous fare cuts this fall have been mere skirmishes compared to Southwest's latest move, said Thom Nulty, president of Associated Travel Management in Santa Ana. "Now we are talking about a serious fare war. All this other stuff has been fun and games."

Southwest said it is cutting at least by half its regular fares, with only a one-day advance purchase required. The new fares will cut the price of one-way travel from Los Angeles to such cities as New Orleans and Houston to $99. Tickets may be purchased until Oct. 13 for travel through Dec. 15.

While the Southwest discounts do not include travel within California--where one-way fares will remain at $69--an airline executive affiliated with neither United nor Southwest said he thinks Southwest is trying to gain high ground against United. Most of Shuttle by United's flights will be on intrastate routes.

"This is all aimed at United," said the executive, who declined to be named. "They are out reaffirming their position as the low-cost leader, making United scramble."

Even if Southwest isn't cutting fares in the United shuttle's core California market, the discounting move appears to be timed to score a publicity coup that will generate favorable word-of-mouth among fliers and undercut the splash of United's start-up.

Southwest's announcement came three days before Saturday's launch of United's low-fare Shuttle by United, which is intended to mimic many of the best features and best routes of Southwest, the leader in high-frequency, short-distance air travel.

For instance, Shuttle will offer flights from Los Angeles to San Francisco for $69 one way, and the service will include assigned seating on the day of departure (which Southwest does not) and credit on United's frequent-flier program.

Southwest Chairman Herb Kelleher has indicated his displeasure at other airlines butting into his carrier's market niche, and he has threatened to retaliate with discount fares on longer hauls. A Southwest spokeswoman denied that United was the primary target.

"It's aimed at the customer," said Ginger Hardage, a spokeswoman for Southwest. "We don't want there to be any confusion about who is the low-cost leader."

A United Airlines spokesman said the Elk Grove, Ill.-based company "will be fully competitive with" Southwest on routes where Shuttle will fly.

"In the other markets, we need to gain additional input," spokesman Joe Hopkins said. He declined to comment on whether he believed Southwest's move was aimed at denting the launch of Shuttle by United.

Other airlines appeared stunned at the Southwest announcement. "We are studying it to determine the impact," said Mike Mitchell, spokesman for America West Airlines in Phoenix. "It's pretty cheap."

Mitchell said that although Southwest is a short-haul carrier, the discounts are deep enough that some customers may be willing to put up with the inconvenience of the extra stops.

"Certainly, there are a lot of passengers who are not going to want to make the stops along the way," he said, "but if the fare is cheap enough, perhaps they will."

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