Big discounts on fares end with Eastern's demise

January 25, 1991|By Maria Mallory

With the death of Eastern Airlines last week, so went the deep-discount tickets that offered air travelers limited but welcome relief from increasing airfares.

The "suicide fares" marketed by Eastern were intentionally priced far below those of its competitors. In that way, the cash-strapped airline tried to lure additional customers and increase the flow of money into is coffers.

Other carriers were compelled to meet Eastern's bargain-basement prices or see their market shares suffer.

USAir, which uses Baltimore-Washington International Airport as a hub, competed head-to-head with Eastern on about 1,400 round-trip routes along the East Coast.

"We did go ahead and also offer those fares in markets where we compete with them because it was necessary to maintain our presence in those communities," said USAir spokeswoman Susan J. Young.

However, "these fares were simply not realistic for the cost incurred to provide the service," Ms. Young said.

Now that Eastern has left the market, the change in the lowest fares available could be dramatic.

For instance, USAir's fare for a seven-day-advance-purchase, non-refundable, round-trip ticket to Tampa from BWI was $231 to compete with Eastern.

After Jan. 31, when the discounts are discontinued, the lowest price travelers can expect to pay for that same ticket will go up by $47.

USAir's rationale is simple: The airline cannot afford to sustain those money-losing fares.

And, though USAir won't comment on future prices, many in thetravel business expect airfares to creep higher industrywide as airlines try to regroup from a collective loss of $2.4 billion on fuel alone for 1990.

But airlines will have to proceed carefully, since their troubles are twofold.

In addition to the rise in fuel prices spurred by the mere anticipation of confrontation in the Middle East, the actual outbreak of war has the specter of terrorism hovering over the nation's airports. Many travelers are thinking twice about flying.

"What I'm tending to see is that because of the Middle East, companies are not traveling," said Lorraine Birtley, branch manager of Baltimore's Thomas Cook Travel agency. "They are not sending their employees anywhere."

Leisure travel also has declined, travel agents said, as vacationers take trains to warmer climates or postpone winter vacations.

The fewer people on the plane, the more the flight costs the airline.

"The carriers can't afford to fly at the kind of loads they are carrying," said James McLean, president of the Four Seas and Seven Winds Travel Agency. As an example, he pointed to a recent flight from Chicago to Baltimore, a DC-10 with a capacity of 160 passengers that carried only 15.

The airlines "are really stuck in the middle," said Diana Kelley, manager of Hunt Valley's Omega World Travel. "If they raise their price to compensate for the fuel, they are going to get even less people."


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