Air fare cut surprises industry Northwest's move could ignite widespread price war; Airlines

THE BALTIMORE SUN

In a surprise move that could spark a widespread fare war, Northwest Airlines said yesterday that it is cutting prices across the board for leisure travelers who plan trips in advance.

The nation's fourth largest carrier said it was slashing fares by up to 40 percent on its 21-day advance purchase tickets and about 30 percent on its seven-day advance fares in every domestic market except Hawaii.

While airlines frequently have fare sales -- with ticket prices often far better than Northwest's latest deals -- they rarely announce such sweeping changes.

In addition, unlike sporadic fare sales, the new fare cuts by Northwest don't expire and have no blackout days.

"This is probably the second drastic big move by one single airline in years," said Tom Parsons, publisher of Best Fares magazine in Arlington, Tex.

In 1992, American Airlines dropped its prices in all categories, including business fares, by 38 percent, touching off chaos in the industry. Northwest sued American, alleging predatory pricing.

But Parsons cautioned that the surprise move by Northwest, normally an industry leader in keeping fares high, could be an effort to pre-empt rock-bottom fare sales.

"If Northwest's intent is to give us no more fare sales, then this is a bad deal for consumers," he said.

The new 21-day advance purchase fare between Baltimore and Detroit is $238 round trip, compared with $397 previously. A recent fare sale that expired today, however, offered round trip tickets between Baltimore and Detroit for $158, with restrictions.

But Northwest insisted yesterday that it still plans to offer special fare sales.

The difference, it said, is that customers won't have to wait for sales to plan vacations and purchase discounted tickets, the company said.

"Customers now have access to attractive air fares every day without the narrow travel periods and blackout dates normally associated with fare sales," said Michael Levine, executive vice president for marketing and international. The company said 21-day fares have jumped 62 percent during the past four years.

Some airlines reacted immediately, saying they would match Northwest's new fares.

And others, such as US Airways, contended that the fare structure was nothing out of the ordinary.

"The concept of everyday low fares is nothing new," said David Castelveter, a spokesman for the Arlington, Va.-based US Airways, which handles 45 percent of the daily passengers at Baltimore-Washington International Airport.

"We have been offering everyday low fares in most of our Florida markets and many other markets for nearly three years," Castelveter said.

The difference, however, is that most airlines don't offer them in every market.

And Parsons said the fare restructuring announced by Northwest has taken other carriers by surprise. "This has caught the competition so off guard," he said. "They don't know what to do yet."

Northwest said yesterday that its new fare program, called "Everyday Deals," is targeted solely at leisure travelers and will not affect business travelers who typically book late and make up the most significant portion of an airline's revenues.

The move is an effort by Northwest to increase the dwindling number of passengers booking 21 days in advance.

Three years ago, 14 percent of all leisure travelers purchased 21-day advance tickets. Today, the number has plummeted to 2 percent.

But leisure travlers, accustomed to fare sales, are still likely to hold out for bargains. "We've seen other major airlines try to manipulate the system," Parsons said.

"John Q. Consumer does not buy unless it's a sale."

Pub Date: 8/21/97

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