Air Carriers Drop Fares, Stay-Overs
Following the lead set by United Airlines last week, other major U.S. carriers have also cut air fares and dropped mandatory Saturday night stay-overs on some flights to and from Chicago’s O’Hare Airport, the nation’s busiest.
While analysts were in disagreement about whether to characterize the latest price-cutting as a fare war, the nation’s two biggest carriers extended fare reductions at each other’s major hubs.
Over the weekend, United, the second-biggest U.S. carrier, pitched a flag in No. 1 American Airlines’ backyard, and announced similar price cuts on seven routes to and from Dallas, American’s main U.S. hub.
Los Angeles-Dallas was one of the seven routes.
American responded Monday by offering similar deals in Denver, a major United hub, but then retracted those fares by day’s end.
“This has been a real circus,” said Terry Trippler an airline specialist for online travel agency OneTravel.com.
American Airlines was quick to match United’s offers last week when the No. 2 carrier slashed fares on seven-day advance purchases on such routes as Chicago-Los Angeles, and eliminated the requirement that passengers stay over a Saturday night to receive the reduced fare. The move also was followed by Delta Air Lines, Northwest Airlines and Continental Airlines.
American did not publicize its sale on Denver routes, nor have the other airlines advertised their price cuts on Chicago flights.
The airlines appear to be wary of playing United’s game, Trippler said, and their reticence is an indication that the reduced prices might not last long. “When they don’t publish that bait, they can pull [the prices] at any time,” he said.
When United announced its new Chicago fares last week, some analysts saw it as the first volley in a new air fare war. The move swept aside the required Saturday night stay-over for super-saver prices on round-trip tickets, which has been among the most onerous restrictions on business travelers since the major airlines first offered cheaper leisure fares in the 1970s.
But Samuel Buttrick, an analyst with UBS Warburg, said it was premature to call the current situation an air fare war.
United’s moves are too narrow in scope for such breathy characterizations, Buttrick said. United, he said, is simply trying to win back customers who have switched to regional airlines such as American Trans Air.
In New York Stock Exchange trading, United parent UAL Corp. fell 4 cents to close at $34.50; American parent AMR Inc. fell 61 cents to close at $33.59.
