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The Honolulu Advertiser
Posted on: Sunday, July 21, 2002

Airlines put squeeze on senior discounts

By Barbara De Lollis
USA Today

Unsuccessful in raising fares this year and still facing steep losses, some major airlines are taking away Grandma and Grandpa's discounts.

American, Delta, Northwest and United airlines have followed US Airways, which two weeks ago cut a senior discount that lopped 10 percent off most fares. Some are still making senior coupon books available, while others are adopting more restricted discounts.

United offers qualifying seniors a 10 percent discount for fares bought at least 14 days in advance that include a Saturday night stay and a maximum stay of 180 days. The airline also changed the eligible age from 62 to 65.

The move is airlines' latest step to boost revenues. Some have raised fees for paper tickets, excess checked baggage or alcoholic drinks on trans-Atlantic flights.

Some airlines have raised advance-purchase airfares four times this year, withdrawing them when competitors failed to adopt the increases.

"The airlines have been attempting to raise leisure fares and have been unsuccessful," says Bob Harrell of Harrell Associates, a New York firm that tracks airfares. "When this happens, they often go after smaller or perhaps more achievable objectives by tightening discounts or loopholes in fares."

Major carriers are struggling to curb staggering losses, in part from tight corporate travel budgets and businesses' refusal to pay as much as 10 times what leisure travelers pay for the same flight. To spur travel, most airlines have been discounting their fares.

"Obviously, we need to try and raise revenues in the environment we're in right now," says United spokesman Joe Hopkins. "We think it makes economic sense to do so, but we're continuing to give senior citizens a break to those who are 65 and over."

The major airlines lost up to $1.4 billion in the second quarter — the industry's worst April-June period on record, says UBS Warburg analyst Sam Buttrick.

Some travel experts question the wisdom of aiming price increases at a market they say will grow stronger as more baby boomers turn 56.

"One of the things we know about seniors is they have a real belief that they deserve a discount," says Doug Shifflet of D.K. Shifflet and Associates, a travel research firm. "If there are two airlines competing head-to-head for their business, the one that has a discount will certainly get favorable consideration."