Posted at 11:45 a.m., Friday, September 28, 2001
The September 11 attack
Delta, Southwest could begin wave of discounts
Bloomberg News Service
CHICAGO — Delta Air Lines Inc. and Southwest Airlines Co. may lead U.S. carriers in discounting fares to draw edgy consumers back onto planes now that President George W. Bush is pledging more security after the Sept. 11 terrorist hijackings.
Most U.S. airlines this week began offering a few discounts and they may expand the promotions in coming weeks to help overcome travelers' fear of flying, analysts said. Bush yesterday promised to add armed marshals for flights, strengthen cockpit doors and make airport security a government responsibility, and he urged states to deploy National Guard units at airports.
"We could see the `everything must go sale' coming up this weekend," said Terry Trippler, a fare analyst for the online travel agency OneTravel.com who hadn't seen much discounting until this week.
Delta will cut fares and is preparing a promotion to offer some 10,000 tickets to New York City at low prices, or perhaps for free, Chairman and Chief Executive Leo Mullin said today. Most major carriers matched a sale earlier this week by discounter Southwest.
Airlines have reduced flights by a fifth and executives say planes are only about 30 percent to 40 percent full following the attacks. Passenger loads are about half what they were last September and below their typical 65 percent break-even point.
Fare activity is on the rise now, said Anne Marie Razza, a product manager at the online travel agency Orbitz LLC. United had a $187 fare between Chicago and Phoenix, down from $339 before Sept. 11, and American cut a San Jose, California-Tampa fare to $146 from $302, according to Orbitz, which is owned by five biggest U.S. carriers.
While airlines have been eager to bring passengers back to their planes, their need to hang onto every dollar of revenue has made them reluctant to cut prices, analysts said. Carriers had already reduced fares this year because of a drop in corporate travel demand, and U.S. airlines were forecast to lose a combined $2.6 billion even before the attacks.
The airlines were "worried that dropping prices won't motivate people," said Mike Levine, a Harvard University law professor and former Northwest Airlines Corp. executive.
"The further we get away from September 11, the less true that is and the more likely you'll see fare actions to get people back on the planes," Levine said.
