Home / World Business
Wed, Jul 14, 2004 - Page 12 News List

US airlines start their fall sales push early

PRICE CUTS At a difficult time for struggling carriers, low-cost airlines are posing a new threat to the majors with their deals on late summer and early autumn flights


The US airline industry was already dreading that a strong summer for air travel would wither by Labor Day. Now, an aggressive and unusually early round of fare sales by the low-cost carriers is threatening to wipe out any chance of profits for the industry in the autumn.

JetBlue Airways was set to announce yesterday that it will cut its prices by as much as half on 1 million seats between Sept. 7 and mid-December, with one-way fares of US$29 to US$99 if tickets are purchased by July 29. The period around Thanksgiving is excluded.

The announcement from JetBlue, whose main hub is Kennedy Airport in New York, comes a week after Southwest Airlines, the leading low-fare carrier in the industry, announced a wide-ranging package of US$39 to US$99 fares for late summer and early fall flights, reducing prices by as much as 65 percent. Tickets must be purchased by Aug. 5, and apply to all but two of the airports Southwest serves.

The period between Labor Day and Thanksgiving week is one of the slowest of the year for air travel, and the industry is used to seeing fare sales in that period. But they are rarely so sweeping, or announced so early, nor are they usually led by the low-fare carriers rather than the major carriers. They come now at an especially difficult time for struggling carriers like Delta Air Lines, United Airlines and US Airways.

The major airlines once hoped that this year might return them to profitability after the long drought touched off by the September 2001 terrorist attacks.

Instead, they face potential combined losses of US$3 billion or more this year, analysts estimate, because of high fuel prices and ever stiffer competition from discount airlines like JetBlue, whose operating costs are much lower.

United, Delta and US Airways are all pushing their unions to agree to deep new cuts in wages and benefits.

United, which failed to win federal loan guarantees last month after three attempts, is now trying to line up investors to help it emerge from Chapter 11 bankruptcy, a fate that Delta and US Airways are trying to avoid.

The fare sales by JetBlue, Southwest and others are "a brilliant squeeze play" on the big airlines, said Kevin Mitchell, chairman of the Business Travel Coalition, which represents corporate travel departments and business travelers.

"It's going to force them to accelerate their restructuring," he said of the major carriers.

With the low-fare airlines scheduled to add dozens of new planes to their fleets in the near future, the sales are also a "market-share grab," said Robert Mann Jr, an industry consultant based in Port Washington, New York.

Keith Taylor, vice president of revenue management at Southwest, said his airline was not deliberately trying to injure competitors with its fare offers.

But "we've always tried to stir things up a bit and lead the way," he said.

David Neeleman, the chief executive of JetBlue, offered a similar rationale.

"We're just trying to fill some seats," he said.

This story has been viewed 3300 times.

Comments will be moderated. Keep comments relevant to the article. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. Final decision will be at the discretion of the Taipei Times.

TOP top