Air fare wars: ticket sales sag, prices do a nose dive
The current air fare price wars are so intense, ''you can't afford not to fly ,'' says one airline spokesman.
One-way flights from the New York area to Florida are at $77, with one airline offering a flight from Newark for $59 on weekends. New York to Dallas-Fort Worth is down to $130 one-way this week, after a two-day offer last week of a $130 round-trip fare between the two cities for flights originating in Texas. Continental and TWA are offering a $258 round-trip transcontinental flight until March 31.
Now, one airline says all you need is box tops. Five box tops, to be precise. That's all. Just five box tops from Ralston Purina's Chex Brand or Honey Bran, and your two- to 16-year-old child gets a one-way ticket to anywhere Republic Airlines flies in the United States. The child must be accompanied by an adult.
Air fare discounting - aimed primarily at picking up more passengers after a sharp two-year dip - has resulted in the deepest fare cuts in aviation history, according to Daniel Henkin, a spokesman for the Air Transportation Association, the industry trade group.
Some airlines, like Delta and Capitol, have even gone as far as saying that they will not be undersold on discounts: Delta will match any fare any airline is offering on any route Delta flies. If a customer can find a cheaper fare of the same class and on the same day, Capitol will let them fly for free.
The reasons for all this discounting are as clear as the Statue of Liberty is to the pilot of a 747 on a clear day in New York. The exact nature of the discouting seems to depend largely on what the competition is doing, but partly on just how imaginative the airlines' promotion managers may be on any given day.
Virtually all airlines are being buffeted by the overall slump in ''revenue passenger miles'' (RPMs) - an airline industry index combining both the number of miles and passengers flown for any given time. Daniel Kaplan, director of Civil Aeronautics Board's Office of Economic Analysis, says that RPMs were down 6.2 percent for the year ended Sept. 30, 1981, from the same period the previous year. He adds he has little reason to believe that RPMs are coming out of their decline now. There was, however, some very slight impr vement in RPMs this past January, due primarily to discounting, according to the Air Transport Association.
Another factor fueling the air fare bargains, Mr. Kaplan explains, is the current recession. And many businessmen have curtailed their usual amount of flying.
Yet another reason spurring ticket price competition has been the advent and, in some cases, phenomenal growth of the so-called ''no-frills'' airlines since deregulation in 1978.
Carriers like PEOPLExpress, New York Air, Midway Airlines, and other comparative newcomers can offer cut-rate fares with less risk than larger airlines can. The smaller, newer airlines often use smaller, more energy efficent planes, have smaller crews, and less highly paid employees from pilots to baggage handlers. Moreover, many major carriers have had the economic burden of unprofitable shorter routes to carry because they have wanted to maintain their positions as ''full-service airlines.''
And, according to Wall Street airline analyst Julius Maldutis, there's another overlooked reason why airlines are taking a terrific financial beating and so in turn are offering some unprecedented discounts: ''cheaper gasoline.''
Mr. Maldutis, who is with the firm of Salomon Brothers Inc., says that aside from other problems, ''the availability of gasoline at significantly cheaper prices has induced people to drive rather than fly.'' He points out it is still cheaper for a family of four to drive to Florida than to fly. Airlines have aggravated the situation by discounting ''individual seats'' rather than producing an incentive for a person to fly with his family.
Some airlines are beginning to turn to more family packages - though certainly not all the way Republic has done it with its cereal proof-of-purchase offer. Republic spokesman Redmond Tyler is quick to point out that the box tops which can be redeemed for a child's airline ticket ''do not offer the lowest fare (for families) in every case.''