These latest price cuts -- for flights within the 48 contiguous states -- will be more of a boon to business travelers than to vacationers. Most carriers already are offering deep discounts to their leisure customers.
Some airline analysts applauded the move.
A Delta employee helps passengers check in at Denver International Airport. Delta's new fare structure could send ripples across the industry.
(Matthew Staver -- Bloomberg News)
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Robert N. Ashcroft, of UBS Investment Research, called it "long overdue from a customer-service standpoint. And that can't be a bad thing."
Though the plan could weaken Delta's ticket sales in the short term, Raymond Neidl of Calyon Securities Inc. wrote in a research report, "we think it will draw more customers and prove to be worthwhile in the long term."
But there are doubters.
"Any fare restructuring in which the average fare paid does not increase can only send an airline to bankruptcy court," said fare expert Terry Trippler, president of the travel information Web site TerryTrippler.com. "You can't continue to sell a product for less than it costs you to produce it, no matter how it is packaged. . . .
"Airlines don't need more passengers. They need more profitable passengers."
Standard & Poor's analyst Philip Baggaley offered a gloomy scenario.
"If fuel prices spike back up or a terrorist attack hurts travel while Delta is still going through the near-term period of revenue loss from the fare change, then the airline's financial condition could deteriorate dangerously," he wrote in a research note.
Baggaley also warned of dire consequences if competitors undercut Delta's fares or dangle new frequent-flier bonuses in front of travelers.
That's why, to Robert L. Crandall, Delta's move must have seemed like Yogi Berra's deja vu all over again.
As chairman of American Airlines in 1992, Crandall had said, "The system, quite simply, is broke."
So Crandall rolled out a program called Value Pricing, which cut ticket prices and offered only four fares per route: first-class, no-advance-purchase, seven-day advance purchase and 14-day advance purchase.
Within months, American abandoned the plan, citing huge financial losses ($251 million in two quarters) and "intense competition" that drove fares down to as low as $99 for a one-way ticket from New York to Los Angeles.
Thirteen years later, American's Value Pricing has become Delta's SimpliFares. Delta said it expects to lose money in the short term, but it thinks that will be offset by picking up new passengers and reducing operating costs. With fewer fare options per flight, for example, reservations agents won't have to spend as much time with customers over the phone, the thinking goes. And, like many other airlines, Delta has begun adding a $5 surcharge on each ticket purchased over the phone, $10 if purchased at a ticketing counter. That, Delta hopes, will drive customers to the carrier's Web site -- the cheapest way, by far, to sell tickets.
