Northwest slashes fares to entice leisure fliers
By Mary Schlangenstein
Bloomberg News
ST. PAUL, Minn. — Northwest Airlines Corp. reduced some advance-purchase fares aimed at leisure travelers by 25 percent as the fourth-largest U.S. carrier tries to revive passenger demand.
The airline cut the prices for its Every Day Deals fares and reduced the minimum advance-purchase period to 14 days before travel from 21 days. Northwest also offered options to boost the savings to as much as half, and expanded some business-fare discounts to include companies with travel contracts.
The changes were in the works before the Sept. 11 hijackings, Northwest said. Those attacks left travelers reluctant to fly and increased losses for U.S. airlines, which already were forecast to lose billion of dollars as demand declined and costs rose. Since the attacks, airlines have eliminated jobs and flights to cut costs, and reduced fares to try to increase sales.
"There is going to have to be a series of other steps, including increased security, to get people traveling again, but this is one major step in the right direction," said Ray Neidl, an ABN Amro analyst. "It's something that gets publicity, gets travelers' attention, and that's what you need right now."
Under the new pricing, a one-way flight from Washington, D.C., to Seattle during off-peak hours would cost $273, compared with $364 under the previous Every Day Deals fares.
Northwest yesterday said its planes were 66.3 percent full in October, down 8.9 percentage points from the year-earlier month. The carrier last month said its third-quarter profit declined 91 percent to $19 million, or 20 cents a share, including U.S. government aid. Sales fell 17 percent to $2.59 billion.
"This seems to be a positive step for consumers and the way they have handled this is interesting," said Katie Connell, a spokeswoman for Delta Air Lines Inc., the third-largest carrier. "We have taken no action (to match the fares) at this time. I couldn't speculate as to whether or not we would."
AMR Corp.'s American Airlines, the largest carrier, said it hasn't made a decision on the fares, while the second-biggest, UAL Corp.'s United Airlines, expects to match some of them.
"We are preparing matches for some of their actions and we are evaluating others," spokesman Chris Brathwaite said. "It is a fluid situation, given the scope of the fare action."
Continental Airlines Inc., the fifth-biggest U.S. carrier, and No. 6 US Airways Group Inc. said they haven't matched Northwest's changes.
America West Holdings Corp.'s America West Airlines, the eighth-biggest carrier, was evaluating Northwest's fare moves, spokeswoman Patty Nowack said.
Northwest expects to retain the lower fares, which apply in the U.S., excluding Hawai'i and Canada, even if competitors don't match them. In many cases, airlines will drop fare reductions or roll back price increases if rivals don't match them to prevent being caught at a competitive disadvantage.
In addition to the 25 percent reduction, Northwest is offering as much as 50 percent off previous Every Day Deals prices for customers traveling with a companion on any day except Sunday. A Saturday night stay and 14-day advance purchase are required.
The airline is cutting fares as much as 40 percent for travelers staying at a destination seven days, and for those booking tickets 30 days in advance. Both carry restrictions.
For companies with corporate travel contracts, the airline is allowing additional discounts under its BizFlex, BizFlex First and ConnectFirst programs. Corporate discounts under leisure-oriented fare programs will be stopped, the company said.
