Fare reductions puzzling but welcome

The reductions were announced Jan. 5, and most of the legacy airlines had followed suit by Jan. 7. These changes offer to make business travel more convenient and less costly. And these low fares are not being treated as a “fare war,” but as a permanent restructuring of the Delta business model.

There are considerable reductions, such as the lowering of a one-way coach fare from New York City to Jackson Hole, Wyo., from $1,100 to $499. First-class tickets are also included. For example, a first-class ticket from Atlanta to San Diego has been slashed from $1,400 to $599.

This change has not offered much fare relief for locations such as Springfield, as fares from Springfield have always been considerably higher than fares from Kansas City, Tulsa or St. Louis.

Elimination of the Saturday night stay requirement means that now a business traveler who wishes to return home after his business is completed on Friday evening may do so without a fare penalty.

Previously he was required to lengthen his stay through Saturday night in order to receive a lower fare. The difference between these fares in some cases has been considerable.

The airlines are all in dire financials straits. In the most recent reported quarter, ended Sept. 30, 2004, only three airlines made any money in what is traditionally the industry’s strongest quarter.

Alaska Airlines, Jet Blue and Southwest were the only moneymakers. The primary culprits harming airline profitability are generally considered to be high fuel costs and a weak pricing environment.

For several years the airlines have been selling their product for less than the cost of producing it. They have consistently cut fares in an effort to fill seats on their planes in spite of rising costs for equipment, maintenance, personnel and supplies.

Some serious questions present themselves. Can continuing to lower fares do anything but further lower profits? And where will this

spiral end? Will we end up, as a result of

bankruptcies, mergers and acquisitions, with one mega-airline that can charge whatever it wishes for whatever level of service it

provides? And in Springfield, we’re in a precarious situation with limited connections. Will we lose our air access?

The coming year, of course, will prove or disprove the wisdom of the price-cutting strategy. But in the meantime, business travelers will enjoy the lowest, most friendly fares that have ever been available to them, and perhaps they will be the travelers needed to fill those empty seats.

Linda and Dr. Don Overend are principals in The Travel Group, a full-service travel agency.

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