Posted on: Thursday, June 13, 2002
American Trans Air slashes last-minute fares
By Marilyn Adams
USA Today
Discount carrier American Trans Air sharply lowered last-minute fares used mainly by business fliers, the latest sign that weak travel demand is shrinking airlines' prices and profits this summer.
Several major airlines have raised fares three times since mid-April, only to withdraw the increases days later when competitors didn't match them. In another sign, industry leader American Airlines last week warned of a "significant" loss in the second quarter, saying recovery has slowed since the first quarter.
ATA's change drops the walk-up fares between Chicago and key business cities on the East and West coasts by 25 percent to 40 percent. The top fare from Chicago's Midway Airport to New York's LaGuardia, for example, falls to $259 one-way from $395, and the one-way fare from LaGuardia to Los Angeles to $339 from $543.
"If we sell two seats at $330 instead of one at $500, we're better off," said Stan Hula, vice president of ATA, which hubs at Midway.
In March, America West was the first carrier to restructure last-minute fares generally used by business travelers. It eliminated Saturday-night-stay requirements and cut fares for one-way travel and tickets purchased less than 14 days in advance. ATA doesn't have advance-purchase Saturday-night-stay requirements, and the fares it cut are for refundable tickets.
Coming just days after ATA disclosed it will lose money this quarter, the fare restructuring shows how weak passenger demand continues to be. Hula said only 1 percent of the airline's tickets were selling at the highest fares, so that fare level was scrapped. Meanwhile, ATA has continued taking new airplane deliveries at a brisk pace, meaning more seats to fill.
"When you're losing money and demand is weak, you have to do something," Hula said.
Thom Nulty, president of national travel agency Navigant, noted that ATA's announcement comes as summer begins, the slowest season for business travel.
United and American airlines, Chicago's dominant carriers, said they matched ATA's prices on routes where they compete with ATA, but will require advanced purchase. United and American operate from O'Hare airport.
