Airlines slash rates for online bookings
Associated Press
NEW YORK — Delta Air Lines yesterday initiated discounts of up to 20 percent for roundtrip tickets purchased over the Internet in an effort to spur summer and fall leisure travel spending at a time when corporate spending has fallen off sharply.
American and America West airlines announced similar savings shortly thereafter, mimicking Delta's attempt to drive traffic to its Web site and encourage low-cost bookings.
Fares booked on airlines' Web sites are less expensive for carriers because they do not have to pay distribution fees to the electronic reservation systems used by travel agents. These fees cost airlines an average of $12 per roundtrip ticket.
"They're saying, 'If you help us save, then we're going to help you save,' " said UBS Warburg airline analyst Sam Buttrick.
The online discounts came as Delta launched an overall summer fare sale. However, aside from potential savings from booking on the Web, Buttrick called the Delta rate cuts "unremarkable."
Consumers without Internet connections are eligible to take advantage of the savings through travel agents that offer special services through Delta's Web site.
The action taken yesterday by the three major carriers is consistent with recent efforts to boost online ticketing.
"Since the early 1990s, the airlines have made a concerted effort to reduce distribution costs, which currently account for roughly 15 percent of operating expenses," Susan Donofrio, a Deutsche Banc Alex. Brown analyst, said in a recent industry note.
By increasing sales over the Internet, Donofrio said, airline executives believe they can halve distribution costs as a percentage of revenues over the next few years.
Delta, American and America West were among the many airlines that posted hefty losses in the first quarter after a slowdown in the economy prompted major companies to crimp spending on business travel.
Delta's special fares are being offered through July 8 for leisure travel to most parts of the United States, Latin America and Asia occurring before Oct. 31.
America West is offering online discounts of as much as 15 percent on flights to many parts of Mexico, including Acapulco and Mexico City, if reservations are made before July 1. Through June 29, American is offering special deals to parts of the United States, Mexico, Europe and other destinations.
Before Delta's announcement yesterday, online discounts were typically in the range of 5 percent to 10 percent.
Industrywide discounts have been in place for 128 days this year, compared with just 73 days of discounts this time last year.
The Delta sale is steeper than a similar price cut made last year by US Airways, which reduced its online fares by up to 15 percent.
