Monday, Jun. 08, 1992
Save Me a Cheap Seat
Travelers cheered but Wall Street booed when U.S. airlines slashed many airfares to their lowest levels in at least a decade. Northwest ignited the latest wars by cutting advance-purchase coach fares in half for families traveling with children ages 2 to 17 in the 48 contiguous states. American topped that by offering 50% off all advance-purchase coach seats on flights in the same region. Most other major carriers swiftly followed American's lead. The reductions cut the round-trip price of New York-Los Angeles flights to just $200 while fares between Atlanta and Chicago fell to $130.
The discounts delighted consumers, who swamped airlines with inquiries and rushed to trade in existing tickets for the new cheap seats, which must be purchased by June 5. United said its reservation lines handled 45% more calls than usual after the low fares were announced.
But fears that the donnybrook would ruin the industry's hopes for profits this year staggered airline stocks last Thursday before a rebound the next day. Analysts said the carriers now seemed certain to run once more in the red, after losing more than $6 billion since 1990. That could make it tougher for weak airlines such as TWA and Continental, which are in Chapter 11 bankruptcy proceedings, to continue to fly.