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Rivals to Match Northwest Fare Cuts

May 7, 1993

NEW YORK (AP) _ Major airlines copied Northwest Airlines’ latest fare cuts on Friday, but travelers were not necessarily jumping at the summer discounts of up to 33 percent on North American flights.

Travel agents said passengers apparently were waiting to see if a fare war like last summer’s half-price sale was looming.

Northwest announced its reductions late Thursday, giving the airline a day as the only carrier with the discounted fares.

On Friday, American Airlines, United Airlines, Delta Air Lines, USAir and Continental Airlines said they would offer similar promotions in markets where they compete with Northwest.

Northwest used a similar strategy in announcing a 35 percent fare discount last month, disclosing the promotion on a Sunday. Other major carriers weren’t able to match the cuts until the next day.

Activity at many travel agencies was average Friday.

Some agents said many people had not yet heard about the offer. Other agents said customers, expecting another sale when this one ends, weren’t rushing to book flights.

″People are conditioned now to wait for a sale,″ said Barbara Hemberger, a spokeswoman for Carlson Travel Network. Hemberger said there had been scattered interest at Carlson agencies around the nation, ″but it doesn’t compare to last year’s fare war,″ when ticket buyers jammed phone lines.

Northwest’s latest sale on North American and some trans-Atlantic flights ends at midnight on May 18. Sample round-trip fares for travel between July 1 and Sept. 15 include Boston-New Orleans for $298 and Detroit-Atlanta for $218.

Under the sale, travel must begin on or after May 27 and be completed by Sept. 15. The non-refundable tickets require 14-day advance purchase and other restrictions apply, Northwest said.

Jack Bloch, owner of JB’s World Travel Consultants in New York City, said customers have seen so many promotions and sale extensions that they don’t take expiration dates seriously.

″There’s no heavy demand for what you see in the newspaper,″ said Bloch. ″No one’s rushing because they know it’s going to be available for a while, whether the expiration date is extended or renewed, or an airline comes out with a new promotion.″

The discounts are not expected to be as devastating to airline finances as last summer’s 50 percent off sale. The chief financial officer for American Airlines, the nation’s largest carrier, has said a 35 percent off sale would be good for the industry even if it lasted through the summer.

Summertime fare sales are common as airlines scramble over attracting leisure travelers at a time when business travel typically drops off.

Northwest’s persistent discounting has prompted concern that the carrier, which is trying to restructure its finances, needs cash to pay operating costs.

Phil Brannon, airline bond analyst at Mabon Securities Corp., said Northwest might see ″some pickup of some incremental business, but opens itself up to a big disadvantage if a price war beaks out.″

Since all the major carriers have already shown themselves prepared to compete during earlier promotions, Northwest runs the risk of a competitor extending the cuts far longer than it can withstand.

According to Brannon, American made that threat abundantly clear during Northwest’s April promotion, flirting publicly with the possibility of keeping the discounts in place until December.

″American claimed it was a mistake and rolled back the offer,″ said Brannon. ″But some observers felt American was trying to send a clear message to Northwest: ’Engage in these price cutting actions at your own peril.‴

Northwest’s parent company, NWA Inc., lost $106.9 million in the first quarter before the effect of an accounting rule change.

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