Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, August 12, 1993 TAG: 9308120097
SECTION: BUSINESS PAGE: B8 EDITION: METRO
SOURCE: Associated Press
DATELINE: DALLAS LENGTH: Medium
Industry experts said they expect ticket prices could continue to get beaten down in the wake of the verdict, partly because of the trial's outcome and partly because of weak traffic numbers and persistent overcapacity.
"I think this is `Katie, bar the door,' " said Julius Maldutis, an airline analyst at Salomon Brothers in New York.
Jurors in Galveston, Texas, on Tuesday rejected claims by Continental and Northwest airlines that American tried to drive them out of business when it launched its "value pricing" system and wound up gutting fares last year.
Maldutis predicted carriers will launch another series of price cuts, perhaps as soon as next week.
"I think that a number of fare actions were delayed or postponed as a direct result of the trial. I would go so far as to say that the trial had a chilling effect on an industry that is known for extreme price volatility," he said.
Major airlines have been raising their base prices slowly, while offering frequent discounts to lure travelers who have come to expect sales. Airlines raised fares 5 percent last month, the second across-the-board increase since December.
Last week, in the midst of the monthlong trial, Delta Air Lines kicked off a sale of up to 35 percent for late summer and autumn travel, and the other major carriers joined in.
American Chairman Robert Crandall and Vivian Lee, airline analyst with Smith Barney Shearson, both said after the verdict that the trial had little effect on fares. Rather, Lee said, fierce competition and overcapacity - too many planes for too few travelers - have fueled low prices.
Analysts did agree that it probably will be a long time before there are any further attempts at fare simplification such as the American plan that parked the lawsuit.
by CNB