Lower Fares

A far-reaching cut in airline passenger fares was announced jointly this week by giant amphibious Pan American Airways and its scrappy, up-&-coming offshoot, Pan American-Grace Airways. The cuts average 10%, affect all flights between the U.S. and Latin America, will save 500,000-odd Pan Am-Panagra customers $1,250,000 yearly. Sample cuts: Miami to Buenos Aires $550 to $495; Miami-Lima $354 to $320; Miami-Bogota $213 to $183. The new rates will become effective whenever the airlines get CAB approval (probably two months).

Unlike most price-cutters, Pan Am and Panagra did not reduce rates to get more business--they already have more traffic than they can handle, practically all flights have long waiting lists. Instead they cut rates after CAB held a closed session with airline operators, broadly hinted the jam-packed U.S.-Latin American airlines were making too much money--especially in wartime. Next to get a similar hint will be U.S. domestic airlines, which hiked profits over 100% in the first nine months in contrast to a 30% decline in general corporation profits.

Although the rate cuts will temporarily flatten airline earnings, most operators are not worried, feel confident their profits will be quickly regained when they get enough planes and equipment to handle all available business. Meanwhile the airlines will put themselves in a better spot to lure still more traffic from the rail and steamship lines.

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