United Cuts Fares, Drops Stay-Overs
In a dramatic bid to lure business travelers back into its planes, United Airlines on Thursday slashed air fares and abolished mandatory Saturday night stay- overs on some of its key national routes.
"This is the spark that will ignite the air fare forest fire," said Thom Nulty, president of Navigant International, a Denver-based travel management company.
United's decision is particularly bold, because it sweeps aside the required Saturday night stay-over for super-saver prices on round-trip tickets, Nulty said. That requirement has been perhaps the most onerous restriction on business travelers since the major airlines first offered super-saver fares in the 1970s, he said.
Whenever carriers have relaxed the requirement, air fare wars erupted.
United's price changes, which went into effect Thursday, affect flights from a number of major U.S. cities--including Los Angeles, San Francisco, New York and Washington, D.C.--to its largest hub, Chicago's O'Hare Airport.
For example, a round-trip ticket bought one week in advance for a trip from Los Angeles to Chicago now can cost $376 for flights beginning Sept. 5. That's a fraction of the $2,314 United normally charges walk-up passengers for the same route or the $910 it charges for a two-week advance purchase.
"We're responding to the competitive pressures we face in the Chicago market," said Joe Hopkins, a spokesman for United, a subsidiary of UAL Corp.
The new prices, Hopkins said, will last indefinitely. "It's more of a structural change than a short-term sale," he said.
United's move could force other carriers to reduce fares on the same routes or to offer similar deals at different locations, industry experts said.
Delta Air Lines indicated late Thursday that it is preparing a counter offer. "We will be competitive with those prices . . . in those markets," a spokeswoman said.
And American Airlines, which recently surpassed United as the No. 1 carrier, and Northwest Airlines said they are studying the possibility of following United's lead.
The collapse of business travel because of the slowing economy resulted in losses for most of the major carriers during the first half of the year. UAL's second-quarter loss was a wider-than-expected $292 million, or $5.50 a share, as revenue fell 8.8% to $4.66 billion. The airline industry also is contending with higher labor and fuel costs.
