USAir renews fare war with Southwest Carrier adds flights, matches fares to Chicago, Cleveland to protect BWI turf

August 18, 1993|By Suzanne Wooton | Suzanne Wooton,Staff Writer

Determined to hold onto its turf at Baltimore-Washington International Airport, USAir set off a new price war yesterday with Southwest Airlines.

USAir announced that it would match Southwest's planned fares from BWI to Cleveland and Chicago, with new round-trip restricted fares of $49 and $89, respectively. In trying to spoil Southwest's much-ballyhooed arrival next month, USAir also increased flights and tacked on a new frequent-flier promotion.

"In every respect, USAir's moves are extremely aggressive," said Samuel Buttrick, an airline analyst with Kidder, Peabody & Co. in New York. "You can't roll over and play dead and let Southwest steamroll into your market."

But the upstart, Dallas-based airline wasn't rolling over either.

By late afternoon, it retaliated with a $78 round trip to Chicago and $39 to Cleveland.

"Nobody does lower better," vowed Ginger Hardage, a Southwestspokeswoman at the company's Dallas headquarters.

Before the day was over, Continental Airlines weighed in, promising to match everybody's new prices on its three flights a day to Cleveland, connecting to Chicago.

When Southwest first announced in July plans to fly from BWI, USAir lowered its fare to Cleveland. Continental lowered its fares the day before in anticipation of Southwest's move.

The back and forth yesterday foreshadowed fare wars to come as Southwest fights for a strong presence on the East Coast and USAir struggles to maintain its dominance at BWI, where it handles 57 percent of the 27,000 daily passengers.

"We're going to protect our turf by competing very aggressively," David Shipley, a USAir spokesman, said yesterday.

But with costs 50 percent higher than Southwest, USAir can only hope to slow down Southwest's likely expansion at BWI, said Mr. Buttrick of Kidder, Peabody & Co. In the short run, its new prices will mean a loss of revenue.

"Unless they can cram passengers in the overheads, this is a money loser," Mr. Buttrick said. "But if they're successful in stemming the advance of Southwest, then its aggressive and competitive response will have fulfilled its strategy."

USAir's alliance earlier this year with British Airways gave the airline $350 million in badly needed cash and positioned the carrier to compete initially with Southwest, he said.

"With the implied backing of British Airways, USAir has a reasonable amount of financial flexibility to engage in uneconomic tactical moves," Mr. Buttrick said.

Southwest will start flying from BWI on Sept. 15. The fares announced yesterday by USAir will take effect Sept. 7.

According to John Larkin, an analyst for Alex. Brown & Sons, USAir's move yesterday is geared toward retaining its loyal business travelers, the core of the Midwest routes.

"One way you do that is to sweeten the pot with extra frequent-flier awards," he said.

USAir said frequent-flier program members -- who fly two round trips using unrestricted fares between BWI and either Cleveland or Chicago from Sept. 7 to Nov. 30 -- will receive a free-companion ticket for a USAir flight to any point in Florida or to either Paris or Frankfurt, Germany.

The airline also added four new flights on the two routes -- bringing its total to nine daily flights, or just one short of Southwest's planned 10 departures.

But Mr. Shipley said the airline not only intends to keep its business travelers but to attract passengers who would normally drive or take a train or bus. That's exactly the strategy Southwest has adopted on its highly successful short-haul flights.

Southwest operates 1,400 flights a day to cities within 400 miles of its departures. It is the only major U.S. carrier to report a profit since 1989.

With nearly identical fares, USAir will likely emphasize its full range of services -- including advance reservations, baggage transfer and meal service -- that the no-frills Southwest does not offer.

Southwest is likely to tout its quick turnaround. While its policy of not reserving seats often sets off a scramble at boarding time, flights typically land and take off within 15 minutes of their scheduled times.

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