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Two Rivals Plan to Match Northwest Fare Cuts

May 7, 1993

NEW YORK (AP) _ Northwest Airlines is offering summer fare discounts of up to 33 percent, and two major rivals said they would offer competitive rates.

Northwest announced its reductions late Thursday, giving the airline a few hours in reservation computers as the only carrier with the discounted fares.

Today, United Airlines and Delta Air Lines said they would offer similar promotions in markets where they compete with Northwest. United and Delta said their sale prices would be in reservation computers by Saturday morning.

American Airlines declined comment on whether it was considering matching the fare discounts.

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

Its 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 airline said it would offer bigger discounts for travel completed by June 30.

The non-refundable tickets require 14-day advance purchase and other restrictions apply, Northwest said.

United spokeman Joe Hopkins said that Northwest’s move is a widening of an existing promotion initiated last week by the smaller America West Airlines. He said other carriers matched those discounts, but only in markets served by America West.

The discounts are not expected to be as devastating to airline finances as last summer’s 50 percent sale. The chief financial officer for American Airlines, the nation’s largest carrier, has said that a 35 percent 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. While Northwest may be conceding that fares will be cut eventually and moving to take the advantage, its persistent discounting has prompted some concerns that it needs cash.

Phil Brannon, airline bond analyst at Mabon Securities Corp., has said Northwest’s fare cutting is a sign that it needs to bring money in so it can pay its operating costs.

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

Northwest has reached a tentative agreement with unions representing its mechanics and flight attendants under which the workers would trade concessions for an ownership stake in the airline.

Northwest’s pilots, however, are still negotiating and the deal depends on bankers agreeing to renegotiate terms of the airline’s loans.

In December, Northwest got a $250 million loan from part-owner KLM Royal Dutch Airlines, banks and suppliers to keep it flying through the winter season.

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