Three more airlines increase leisure fares
By Lynne Marek
Bloomberg News
CHICAGO — Delta Air Lines Inc., US Airways Group Inc. and Continental Airlines Inc. matched American Airlines in raising leisure fares $20, as they try for the second time this month to revive revenue after the Sept. 11 attacks.
AMR Corp.'s American, the world's largest carrier, began the increase Thursday on round-trip fares in the U.S., and the other three carriers followed yesterday, said Tom Parsons, who tracks ticket prices for Bestfares.com. Continental, the No. 5 U.S. carrier, last Friday started a similar increase that failed after Northwest Airlines Corp. didn't follow suit.
"The guy who has the best poker game in this deal right now is Northwest," Parsons said. "They're holding the only cards." Northwest declined to comment on whether it might match the latest increase.
Most U.S. airlines are blaming low fares this week as a major reason for lower revenue that contributed to first-quarter losses. The carriers cut fares to try to spur demand after the September attacks.
Northwest might be more willing to follow American's lead if it thinks that matching Continental, its airline partner, would raise antitrust concerns, Parsons said yesterday. Northwest and UAL Corp.'s United Airlines increased price on a smaller number of discounted fares yesterday.
United hasn't matched American's increase, spokesman Joe Hopkins said. He declined to comment on what fare actions United might take.
Airlines typically won't maintain a fare increase if large rivals don't match it because they don't want to be offering tickets at a higher price. The carriers often try to implement price increases on the weekend when many people book travel and may not use a travel agent to check prices. Such increases boost revenue for a few days even if they later are revoked.
Leisure fares typically are for tickets bought at least seven days before the travel date. They often are for flights during non- peak hours on weekdays and require that the travel period include a Saturday-night stayover.
The carriers haven't tried to boost business fares because demand has been weak since companies last year began cutting travel spending amid the U.S. recession. Those fares, which typically are for flights booked closer to the travel date, peaked in 1999 and 2000 as Internet-related companies increased spending.
"The gap between business and leisure fares is still too wide, and leisure fares have to come up," said Salomon Smith Barney analyst Brian Harris. "There have been some attempts to do that, they just haven't figured out yet how to do it."
