Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, February 12, 1991 TAG: 9102120054
SECTION: BUSINESS PAGE: B4 EDITION: METRO
SOURCE: Associated Press
DATELINE: NEW YORK LENGTH: Medium
Financially strapped Trans World Airlines slashed its U.S.-Britain fares by 50 percent; Delta and Pan Am matched the 33 percent trim.
Under TWA's deal, the price of a full non-restricted one-way coach fare from New York to London will fall from $538 to $269. A first-class ticket will drop to $1,602 from $3,205.
The moves came after nearly all the major airlines halved many of their domestic fares Thursday in response to a limited-duration, 50-percent-off sale started by America West Airlines.
Bargain-seeking travelers jammed reservation phone lines and flooded travel agencies with inquiries on how to exploit the biggest domestic plane ticket sale of the year. The deadline for buying tickets ended Saturday, but travel for many of the discounts is good through early next year.
Industry analysts said the boon to consumers could further debilitate the airlines, already hurting from a severe curtailment in travel since war broke out in the Persian Gulf last month. A number of major airlines, including TWA, Pan Am, USAir and British Airways, have announced staff and schedule cuts.
The fare cuts, a powerful demonstration of the industry's pack mentality, were seen as a temporary boost to cash flow but a long-term liability that could depress earnings.
"I view [the fare wars] as destructive," said Mark Daugherty, airline analyst for Dean Witter Reynolds Inc. "Even though the response appears to be pretty good, in the final analysis the number of travelers you will be getting incrementally will fail to offset the loss in fare dollars."
Officials at America West declined to give figures on the magnitude of the response to the sale, which it had peddled as an attempt to "jump start" the air travel industry. But spokesman Mike Mitchell said response was "tremendous."
It was clear the sale helped melt some of America's fear of flying.
"We were writing tickets like there was no tomorrow," said Eric Munro, chief executive of Uniglobe Wide-World Travel in San Diego, which expanded weekend hours to keep up with demand.
Response seemed more dramatic at smaller airlines, in which a majority of routes were involved in the fare cut, compared with more subtle rises at bigger airlines that limited fare cuts to those routes that compete with America West.
American Airlines reported a 5 percent to 8 percent increase over last year at this time. But at Southwest Airlines, which instituted $20 fares on many of its routes in the West, bookings were up about one-third over a year earlier.
by CNB