Airlines Extend Steep Ticket Price Discounts

Still losing millions of dollars a day, the nation’s major airlines are continuing to sharply discount fares to lure leisure travelers, at least, amid the post-Sept. 11 travel slump.

The two largest domestic airlines, American and United, had sales that were supposed to end Dec. 28 for travel until May 19. But with the busy Christmas travel season over, the cheaper tickets are still here, as the two airlines announced in full-page newspaper ads Tuesday. This time the sales--still for travel until May 19--are to end Jan. 15.

Yet that date probably won’t mark the end of the savings boon for consumers, analysts said. There’s a strong chance the fare sales will linger well into the year, as the airlines strive to guarantee at least a minimum number of passengers before the summer.

It’s imperative the airlines do so because they can’t count on the steady income they once enjoyed from business fliers, who typically don’t book well in advance and thus pay higher fares and generate most of an airline’s revenue, observers said.

Business travel, which already was dropping before Sept. 11, remains 20% to 30% below a year ago and isn’t expected to rebound until the U.S. economy does, perhaps in the latter half of this year.

“The extension of the fare sales is an indication of a continuing soft market” for air travel overall, said Richard Bittenbender, an analyst at Moody’s Investors Service Inc. in New York.

The sales reflect the airlines’ desire “to get at least some base level of traffic locked into the system ... and then see how the circumstances develop for the higher-fare business travelers,” he said.

Delta Air Lines also is running a sale for travel through March 14, and US Airways has one for travel completed by Feb. 12. Northwest, Southwest and America West also are among those offering various winter promotions.

In many cases the discounts apply to both domestic and foreign flights, though they cover different travel periods. For example, United is offering one-way flights from Los Angeles to London for $151 each way based on a round-trip online purchase, but for travel only through March 20.

The sales have a host of other restrictions. But the carriers also are paying bonus frequent-flier miles during the sales, and they’re typically knocking an extra 10% off the price if the reservations are made online, because that reduces the airlines’ ticket-distribution costs.

And airlines are desperate to cut costs wherever possible. The one-two punch of the weak economy and the Sept. 11 terrorist attacks saddled the industry with losses of $6billion to $10billion for 2001, and there will be more red ink for at least the first half of this year, analysts estimate.

By the end of 2002, however, “we expect [customer] demand to be fully recovered from post-9/11 terrorism fears ... and from fear of long lines” due to heightened airport security, analyst Brian Harris of Salomon Smith Barney predicted in a report Monday.

Even so, he forecasts that many of the major carriers--such as American, United, Delta, Northwest and US Airways--still will report losses not only for this year but for 2003 as well.

In the meantime, the airlines need to fill seats. American decided to extend its winter sale after seeing how well the traveling public responded to the cheaper tickets late last year, said American spokesman Emilio Howell.

But not enough responded, as the sales’ extension shows. And travelers--already accustomed to years of fare wars between airlines--appear confident that if one sale ends, another is right around the corner because airlines are in such dire straits, analysts said.

“Prices are going to stay low, and I think these sales are going to continue,” said Bob Jones, an analyst at OneTravel.com, an Internet travel-services concern. “For the airlines, that means they’re almost living on a two-week planning cycle” of trying to gauge passenger trends because “they’re not selling their typical amount of leisure, long-term seats.”

Airline stocks were mixed Tuesday. The American Stock Exchange’s index of airline shares edged up 0.20 point to 97.26 points.

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Discount Air Fares

Here is a sampling of discounted one-way fares advertised by United, American and other major airlines from Los Angeles. Best fares require round-trip purchase and must generally be bought online, and restrictions apply.

L.A. to: One-way fare

New York City $143

Miami 179

Detroit 107

Dallas/Fort Worth 137

London 151

Tokyo 179

Paris 179

Milan, Italy 188

Zurich, Switzerland 191