High-level Mess

AIRLINES High-Level Mess While the world monetary system continues to rattle and shake, another citadel of international agreement is falling further into disarray. The airline cartel, embodied in the 108-member International Air Transport Association, has entered a fresh round of warfare over transatlantic air fares. Passengers stand to benefit from lower fares, but some lines may suffer disastrous losses.

The latest eruption came after Pan Am and TWA sent officers to Washington two weeks ago to ask the Civil Aeronautics Board to intervene in the fare fight. In a complex and involved maneuver, the lines wanted the CAB to ask the State Department to put pressure on the West German government; with that, the Bonn government was supposed to put pressure on Lufthansa to reconsider its new fares (as low as $210 round trip in the off-season).

Figuring that the German government would balk if it knew that the U.S. airlines had directly inspired the diplomatic maneuver, the Pan Am and TWA officers asked that part of the 29-page transcript of their meeting with the CAB members be kept secret. No such luck. The CAB men, miffed that the lines wanted to bring the State Department into the act, put the transcript on public sale --at $1.50 a page.

Summertime Blues. If Pan Am and TWA were to match Lufthansa's new fares, the companies' spokesmen said, they would stand to lose a combined total of about $60 million in revenues next year. To turn a profit on the North Atlantic (last year Pan Am lost $7 million and TWA earned $14.1 million on that route), the lines would have to fly their planes 75% full on the average. "Given the seasonal characteristics of this market," said TWA Senior Vice President Elaine Cook, "to average 75% year round, you would have to maintain something like a 120% load factor in the summertime."

The estimates of loss may be open to question, because the low fares will attract more passengers. But even officials of Lufthansa, which is 74% owned by the West German government, admitted last week that the company will lose $24 million on the North Atlantic this year; some airline men say the line may continue to lose next year, despite the new fares. Lufthansa had introduced the fares because its executives feared that the alternative, a fare package worked out by IATA members last summer, would be difficult to administer.

Heads of most other foreign carriers do not believe that reducing fares as low as Lufthansa did can be profitable; yet to avoid losing customers to Lufthansa, Air Canada and Air France have posted comparable prices. Last week Swissair asked its government to approve a fare of as little as $180 round trip for groups of ten who buy from $70 to $149 each worth of meals, lodging and sightseeing along with their tickets. Two weeks ago Irish Aer Lingus announced a $500 first-class, 14-to-28-day fare from New York to Shannon, and an unlimited-stay economy fare of $320 in the off season.

All of the new fares will take effect after Feb. 1, 1972, when the present IATA fare arrangement expires. Air-industry men hold out hope that talks can be started on a compromise fare schedule that all lines would recognize. Meanwhile, airlines continued to fill newspapers and magazines with ads stressing low fares, and more announcements of price cuts are expected in the next few weeks.

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