Southwest plans 20%-65% fare cuts

By Dan Reed
USA Today

Southwest Airlines announced plans yesterday to slash fares starting with August travel, increasing the revenue pressure on its money-losing rivals.

"They are trying to make a statement that they are still the industry's low-fare leader," says industry analyst Henry Harteveldt at Forrester Research.

The discount-airline king began offering one-way sale prices of $39 to $99 on 14-day advance purchases systemwide, except flights involving Orange County, Calif., and George Bush Intercontinental Airport in Houston. In most cases, the fare sale applies to travel between Aug. 16 and Oct. 29. Savings range from 20 percent to more than 65 percent off its previous 14-day advance fares.

Analysts said rivals must match the sale prices of the No. 5 carrier to remain competitive. But that could rob several financially ailing major carriers of cash they need. By mid-afternoon yesterday, American Airlines, Northwest Airlines and US Airways had already matched the sale fares in markets served by Southwest.

"It's time to put the coffee down and to start buying," says low-fares guru Tom Parsons, editor and publisher of Bestfares.com.

Harteveldt says consumers will benefit from the big savings, but the cash-starved network airlines will be hurt. Even profitable Southwest, he said, "is leaving money on the table."