The Uncertain Sky

The world airline industry, bound to gether in the 108-member International Air Transport Association, has been setting air fares for the past 26 years with only an occasional break in its fac,ade of comfortable unanimity. All that will likely end this week. West Germany's Lufthansa has been the sole holdout against a new scale of North Atlantic air fares, and IATA has given the "Route of the Red Baron" until Sept. 1 to go along. If, as expected, Lufthansa refuses to reconsider, IATA members will be without a common rate package.

The resulting every-man-for-himself situation will probably lead to lower fares, but few airline men are willing to guess how soon or how low. The first move will probably be made by Lufthansa itself. The line has already dis closed plans for a 14-to 60-day excursion fare of about $210 round trip between New York and Frankfurt, v. $442 now for 17 to 28 days and $372 for a 29-to 45-day ticket. The fare would apply to passengers of all ages, un like the similarly priced youth fares that Lufthansa and a number of other lines introduced earlier this year. Britain's BOAC may counter with a January-to-March fare of about $150 round trip between New York and London. Other foreign carriers are working out their own open-rate fares, but will probably wait for a move by Lufthansa-- and for the new confusion over exchange rates to subside-- before announcing them.

Faster Cash. In the end, the new fares will probably turn out to be similar to those in the IATA plan rejected by Lufthansa. That arrangement, worked out by IATA representatives in Montreal this summer while pickets protested their secret meetings, came after members began underpricing each other with youth fares. It calls for retention of the student prices for ages 12 to 21 and introduction of an advance-purchase excursion plan. Under APEX, as the ar rangement is called, passengers who buy their tickets 90 days ahead of time would receive substantial fare reductions. Lufthansa considered APEX to be "too expensive to administer and too difficult to police," as one official of the German line put it. "We're against overcomplicating the situation." Nevertheless, Pan Am, TWA and BOAC may go ahead with APEX fares-- partly in order to get sorely needed cash into their coffers earlier than they could otherwise.

Some IATA members cling to the hope that a compromise can be reached before transatlantic chaos sets in. Says Fabrizio Serena, a deputy director gen eral of Alitalia: "Lufthansa has been making noises to the effect that it might possibly review its position if the rest of us make some move toward them." If they come at all, conciliatory moves will probably be made next week, when IATA members meet in Miami to dis cuss fares to Asia and Latin America.

Faraway Places. Despite their dis agreements over what rate structure to adopt, IATA members are generally reluctant to start a price war. "Most trans atlantic airlines are hard put to make ends meet these days," explains Luft hansa Spokesman Claus Dehio, "so fares will have to be kept to a reasonable level, probably just below the rates suggested at Montreal." Still, there is considerable feeling that IATA fares must come down to a level competitive with charter airlines, which are stealing a growing volume of North Atlantic passengers by offering fares as low as $90 one way. Though traffic between E rope and North America on the sched uled lines is normal this summer, many airlines are having trouble filling the additional seats on their newly acquired jumbo jets.

For that reason, they are already drawing up advertising campaigns that emphasize low prices rather than the usual pretty pictures of faraway places."It will be a devil-take-the-hindrhost situation," predicts a BOAC executive in London. "No airline will allow itself to be undercut. But nobody will be happy about it."

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