The Red Baron Strikes Again

WHILE thousands of young Americans were taking advantage of cut-rate fares and jetting to Europe this summer, executives of 40 international airlines voluntarily grounded themselves in Montreal. In 40 days of meetings they tried to reach an agreement on a new set of transatlantic fares to be charged by all members of the International Air Transport Association (I.A.T.A.). The 108-member cartel has dictated the price of international air travel for 26 years, but by the time the meeting adjourned last week, it was no longer dictating. It had managed to work out a complex compromise, and the agreement may come apart before the summer ends. The West German state-owned airline Lufthansa ("The Route of the Red Baron") was not happy with the new fares, and unless the line changes its mind by Sept. 1, an unprecedented air-fare war might well break out over North Atlantic routes.

I.A.T.A.'s final proposal, which must receive unanimous approval to become effective, would keep intact the basic fare of $554 for a round-trip economy flight between New York City and London in the peak season. But four innovations would substantially cut ticket prices for many vacationers. The proposed schedule would maintain transatlantic youth fares of $195 to $225, depending on the season, for anyone aged twelve through 21--a modification of the reductions that swept the industry earlier this summer. It would grant a similar privilege to adults, through an advance-purchase excursion plan (called APEX), which provides for fares as low as $199 for a round trip between New York and London in the off season.

The catch is that passengers would have to pay for their seats at least 90 days before departure and would be charged a penalty of 25% of the price should they fail to show up for their scheduled flights. There would also be a new winter fare of $200 applicable between Nov. 15 and March 15 for a New York-London round trip. Fares would be cut by 8% for "affinity groups" (clubs, professional groups, etc.) that book at least ten seats. That would bring the cost of an off-season New York-London round trip, for example, down to $180.

In Montreal, the West Germans argued that the new fares, especially APEX, would only add confusion to the tangle of transatlantic fares already in effect. Lufthansa officials also claimed that they want to lower some rates even below those now proposed by I.A.T.A. Should the high basic rates of scheduled carriers remain in effect, however, Lufthansa is in a strong position to become a major charter carrier. Its charter subsidiary Condor was the first such firm to buy a Boeing 747 jetliner, and it will soon have a second.

If the West Germans hold firm to their refusal, as most I.A.T.A. members expect them to, some other airlines plan to put the proposed I.A.T.A. fare structure into effect anyway. But few executives believe that it would last for long. "Outside I.A.T.A., it is a gentlemen's agreement," says BOAC Canadian Marketing Manager Zachary Clark. "It would be hard to police, and the 'gentlemen' part would be put under a pretty severe strain."

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