Flying in a maze of new fares, price wars, restrictions
Until this year, the people who worked for American Appraisal Company often traveled first class when they flew from one city to another, helping corporate clients put valuations on their plants and equipment. Not any more.Skip to next paragraph
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''All of our appraisers have to fly coach now,'' says American Appraisal vice-president Michael Kelly. They also have to book flights in advance whenever possible, stay in one city long enough to obtain a ''super saver'' fare when feasible, and try to find the bargains among the commuter, regional, and major airlines. It can often make getting ready to go somewhere a long process.
In other words, big companies like American Appraisal have to go through all the confusion and trouble trying to find the cheapest air fares like anyone else.
Chances are that cost-conscious businessmen and ordinary customers will have to go through that trouble for quite a while longer.
The US airline industry, buffeted by the continuing problem of excess seating capacity, depressed profits, and the task of periodically trying to fit new carriers into the marketplace, is going to have to keep up the often confusing array of new fares, fare wars, and restrictions - at least for a while.
''Actually, I think the (confusing fare structure) is going to get worse,'' said Ida Roberts, spokeswoman for Eastern Air Lines. ''When you have empty seats in the marketplace, you have to go after every little piece of the market you can.''
While discounts will continue, overall fares are expected to increase this fall, says Barry Gordon, vice-president and portfolio manager for the National Aviation and Technology Corporation, a mutual fund specializing in aviation stocks.
''The major carriers will be putting in increases of about 5 percent,'' he says. ''But there will still be some fare wars.''
''Fares will continue to go up again, down again, and up again,'' said David Campbell, airline analyst with Wheat, First Securities Inc., a brokerage firm. ''There have been air fare wars every year for the last 10 years. There's nothing the airlines can do to stop them. You've got to bring in passengers.''
For the airlines, this marketing battle is troublesome and financially dangerous. By some estimates, the US airlines are losing about $1 billion a year , as a result of many planes flying half empty, high labor costs, and the continuing effects of last year's air traffic controllers' strike.
To help reverse this drain, airlines have not only lowered fares, they have offered trading stamps, traded children's tickets for cereal box tops, and moved in and out of various special promotions.
Some are also trying to return or increase service to many of the smaller and medium-size cities that lost it soon after deregulation went into effect. Piedmont Airlines, for instance, has established a new ''hub'' in Dayton, Ohio, to serve cities like Fort Wayne, Ind.; Grand Rapids and Lansing, Mich.; Toledo and Akron, Ohio, with connections to Boston, Washington, Miami, and Dallas.
However, the effort to continue discounts and add service has not helped the carriers very much.
''This industry is struggling,'' admits American Airlines spokesman Al Becker. ''It's hard to do financing for equipment. Wall Street continues to be concerned about the financial condition of the airlines. . . . So everybody is looking for that little competitive edge that will make them more attractive to the consumer.''
But for the traveling public and the travel agents, these ''little competitive edges'' can be exasperating.
''The airlines call it marketing. I call it madness,'' says Bernard Garber, president of Garber Travel of Brookline, Mass., the largest travel agency in New England. ''It's absolute chaos. There's always something happening. Sometimes the changes come by the hour.''
The most common reason for a dramatic fare reduction on a particular route is a new carrier, either an entirely new company or an existing company trying to enter a new market. In these cases, executives of the established carrier can get up one morning and find that a competing airline is charging half, or less, than they do. Or, if they had a low fare with a few restrictions - a seven-day advance purchase requirement, for instance, or a nighttime-only rule - they may find a competitor offering the same fare with no restrictions.
This means the airline passenger must be much more aggressive in finding the cheapest fare and the fewest restrictions. Once, they could simply call a travel agent or airline and tell them where and when they wanted to go, and be fairly sure they would get the best fare; there just weren't that many to choose from.