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Keith Alexander

Delta's Plan Could Signal Shift in Pricing

By Keith L. Alexander
Tuesday, January 4, 2005; Page E01

Delta's planned overhaul of its fare structure could trigger the biggest shift in airline ticket pricing since Congress deregulated the industry in 1978.

Delta, the nation's third-largest carrier, is preparing to simplify its fares and significantly reduce some prices nationwide. It also plans to eliminate a required Saturday night stay and slash the fee for changing a ticket to $50 from $100. Delta officials aren't commenting publicly, but a source familiar with the plan said the airline could announce its new pricing strategy within days.

_____Live Discussion_____
Transcript: Washington Post reporters Sara Goo and Keith Alexander discussed holiday air travel woes.
_____In Today's Post_____
US Airways Mechanics Not Hopeful (The Washington Post, Jan 4, 2005)

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The expansion nationwide follows a test project in August in Cincinnati, the carrier's second-largest hub airport, where walk-up fares to Los Angeles, for example, dropped to $499 each way from $1,202 each way. Walk-up fares from Cincinnati to Boston fell to $439 each way from $627. The source said price declines of similar magnitude are expected when Delta rolls out its plan nationwide.

Delta's move will pressure other airlines to take similar steps. The carrier's size and its dominant position on the East Coast will likely force other older, legacy airlines to match Delta's changes to remain competitive. US Airways already slashed its fares by nearly 70 percent on flights out of Philadelphia in May. American Airlines cut its fares to Miami in November by as much as 86 percent from several airports, including Reagan National, New York's La Guardia and Los Angeles International.

Facing increasing competition, the traditional airlines are finding that the best way to retain their best customers is to match as closely as possible the fares and pricing rules offered by budget carriers such as Southwest, JetBlue and AirTran.

"It's what the passengers are demanding," said Christopher L. Chiames, US Airways' senior vice president of corporate affairs. US Airways has expanded its low-fare strategy from Philadelphia to Washington's Reagan National and Fort Lauderdale, Fla.

Terry Trippler, founder of Minneapolis-based travel site TerryTrippler.com, said the highest-priced tickets, such as those for first class travel, will come down the most, providing a boon to business travelers. Fares that require advance purchase -- those mostly bought by leisure travelers -- will likely see the smallest reductions because they are already low, he said.

Tom Parsons, publisher of Bestfares.com, said passengers who fly to cities that aren't served by low-cost, low-fare airlines will also see minimal -- if any -- fare cuts because the competitive pressures are less. Parsons said that airlines may not reap large revenue gains by slashing fares, but they may be able to protect their market share on given routes.

To offer cheaper fares, airlines have to cut their costs. US Airways is struggling to slash about $1 billion in worker pay and benefits as it takes its second trip through bankruptcy court in two years. Late last year, Delta's pilots agreed to about $1 billion in pay cuts as the airline was preparing to file for bankruptcy itself.

The Delta fare plan, reported Sunday night by Time magazine, comes after a rough holiday travel period for many airline passengers. Delta's main commuter carrier, Comair, had to cancel all 1,100 of its flights on Christmas day because of a computer glitch, causing thousands of Delta travelers to miss their connecting flights. US Airways canceled 450 flights because of staffing shortages and bad weather.

"The recent customer service fiasco probably forced the airlines to move up their launch plans for the new fares," Trippler said.

Donating Miles for Tsunami Relief: Several of the nation's airlines are allowing their frequent fliers to donate their miles to relief organizations helping tsunami victims.

Continental travelers can donate miles to the American Red Cross. Delta members can donate miles to the Red Cross, CARE or UNICEF. United's frequent fliers can donate a minimum of 1,000 miles to the Red Cross. Northwest members can donate miles to the Red Cross and UNICEF. Northwest's minimum donation is 5,000 miles. The miles will be used to help defray the relief agencies' costs.

Check with airline Web sites for information on making donations.

SideStep Changes: SideStep, the popular online travel search tool, plans to start a Web site by the end of the month to allow users to surf for cheap air, hotel and car rental prices without having to download its software. Currently, SideStep users have to download the software to access the company's search technology. But by Jan. 31, users will be able to surf the new Web site, SideStep.com, just as they would the Travelocity, Expedia or Orbitz sites.

One of the biggest criticisms of the four-year-old travel Internet tool was that some users weren't able to download the software because of computer firewalls on workplace or public computers such as in community libraries. Also, the software did not work on Mac computers.

Online Chat: Join The Post's airline security reporter Sara Kehaulani Goo and me at 11 a.m. today for an online chat focusing on the recent holiday travel debacle, the state of the airline industry and airport security. We'll take your questions and comments. Log on to www.washingtonpost.com.

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