Rate War

Hardly had most scheduled airlines jacked up their rates 10% when they began to cut them again. This time it was no orderly, concerted action, but a cutthroat free-for-all. Scared by half-empty planes, the lines were going after passengers with lavish ads, special discounts and other lures.

Even on the international runs, where air traffic was still rising, the planes were getting stiff competition from luxury liners. Many ships were already booked full for next summer while plane reservations lagged. To get the business back, American Overseas Airlines, Pan American Airways and T.W.A. cut their transatlantic round-trip rates for the winter to about 1 1/3 the price of a single summer fare. Sample Pan Am rate: New York to London, $466.60, down from $630.

On the domestic airways, the lines were trying various cut-rate dodges to boost passenger traffic:

P: American offered special family rates on the first three "off-peak" days of every week. Last week 744 families (the father pays full fare, wife & children only half) flew in American planes out of New York alone. American figures that the "family package" has boosted its DC-6 load-factor from 57 to 66%.

P: American and United Air Lines have dropped the extra fare for DC-6 travel.

P: T.W.A. will soon give 20% reductions to parties of ten and more on its domestic flights.

P: Mid-Continent Airlines, with offices in Kansas City, discovered that passengers who flew over a route at least twice a month were entitled to buy "commutation tickets," and thus avoid paying the 15% federal transportation tax. Mid-Continent expects to run eleven commuter routes (sample: Kansas City-Tulsa), sell commuters' ticket books (four tickets, valid for one month) at an 18% discount. At least six other major lines intend to start commuter services.

P: Harried by competition from brisk, unscheduled Trans Caribbean Airways, Pan Am last week made one of the industry's steepest cuts. To lure passengers on its Puerto Rican run it instituted a "coach" service. By ripping out the galley and some baggage racks, it now puts 63 (v. 52) passengers into its DC-4 planes, has cut the one-way fare from $133 to $75 (plus tax).

Airline men, who know that they must tap the middle and lower income groups if they are to survive the air travel slump, expect that Pan Am's trick will soon be adopted by other lines. Said T.W.A.'s Warren Lee Pierson: "The principle of low-cost service has been recognized by the steamships and the railroads while the airlines have stubbornly clung to a one-class service. It's time the airlines offered a choice of classes."

An aircraftmaker last week set up a rental agency for airlines that need new planes but lack the cash to buy them. Floyd Odlum, whose Atlas Corp. controls Consolidated Vultee Aircraft Corp., announced that he would form a $50-million-plus company to buy 100 twin-engined, 40-passenger Convair-Liners. (It will also give Convair some badly needed business.) The planes will be rented out to airlines which may buy them later at cost less depreciation. Odlum hopes eventually to finance the planes of other aircraftmakers in the same way.

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