ATLANTA – Delta Air Lines’ plan to cut its most expensive fares and ax a Saturday-night stay rule for cheaper tickets could be a boon to business travelers.
But some rivals balked at the idea, and analysts warned the move could reduce the already struggling industry’s revenues as much as $3 billion a year if every carrier were to match the cuts.
Shares of airline stocks slumped following the announcement.
Several other airlines were reviewing Delta’s plan. None immediately matched it nationwide. Two discount carriers, Southwest and AirTran, said they already offer lower fares than Delta’s new ones.
One thing is for sure from Delta’s decision, analysts said: The days of paying top dollar for domestic flights are numbered as major airlines try to win back business travelers from discount carriers and fight off mounting losses.
“They need briefcases on airlines to make a profit,” said industry expert Terry Trippler, who runs an airline information Web site.
On Wednesday, Delta Air Lines Inc., the nation’s third-biggest carrier, announced that it was cutting its most expensive fares by as much as 50 percent nationwide and eliminating other restrictions in an effort to woo business travelers and other last-minute ticket buyers.
Delta said no fare would be higher than $499 one-way in coach class or $599 one-way in first class under its new program, which it advertised in newspaper ads in key markets.
Airline officials stressed that not every ticket buyer will get a reduced fare. Leisure travelers are not likely to benefit because they generally buy their tickets well in advance. But this would make Delta’s fare structure easier to navigate.
Airline executives also said that in the short term, the program could lead to lower revenues for the struggling carrier, but it could benefit Delta long-term by bringing in more customers.
Delta fare cut
The plan: The most expensive fares will be no higher than $499 one way in coach and $599 in first class. No Saturday stays required. Big winners: business travelers. Delta is counting on luring more customers.
Reaction: US Airways and Northwest Airlines match it in selected markets. Two discount carriers, Southwest and AirTran, said their fares are already lower.
Effect: Analysts worry that industry revenues could tumble $3 billion a year. Shares of most airlines fall.
Delta fare cut
The plan: Most expensive fares will be no higher than $499 one-way in coach, $599 in first class. No Saturday stays needed. Big winners: business travelers; Delta counting on luring more customers.
Reaction: US Airways, Northwest match it in selected markets. Two discount carriers, Southwest and AirTran, said their fares are lower already.
Impact: Analysts worry industry revenues could tumble $3 billion a year. Shares of most airlines fall.
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