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American Cuts Some Business Air Fares

November 19, 2002|From Associated Press

NEW YORK — American Airlines has taken a tiny step toward placating corporate travelers fed up with the huge disparity between business fares and leisure fares.

American, the world's largest airline, launched a simplified fare structure in a small number of markets last week, lowering the price of tickets bought at the last minute by as much as 40%. The apparent goal is to steer business travelers away from cheaper advance-purchase fares that have become popular during the economic downturn.

It's all part of an effort to compress the wide range of air fares, which many corporate travel managers say is at the root of business travelers' frugality this last year. In many cases the cheapest business fare is five times more expensive than the least-expensive leisure fare.

Many business travelers now purchase tickets far in advance and search the Internet for the best deals -- strategies typically associated with leisure travelers.

Under the changes made by American, the lowest one-way, walk-up fare between Dallas and Los Angeles is now $647, down from $1,078. Between New Orleans and Seattle, the lowest one-way, walk-up fare is now $604, down from $907.

"They're going to be surprised by how many business travelers are going to take them up on it," said Terry Trippler, a Minneapolis travel consultant.

Leisure travelers aren't so lucky, though. They will face tighter restrictions on the least-expensive fares, including requirements to purchase such tickets 30 days in advance instead of 14 days.

The fare structure being tested by American is extremely limited. It will affect passengers on just 23 routes, less than 1% of the carrier's total schedule, which has some 12,500 city pairs. However, analysts say it could mark the beginning of something larger if American succeeds in attracting more higher-paying business customers.

Shares of American's parent, AMR Inc., rose 34 cents Monday to close at $7.15 on the New York Stock Exchange.

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