Lower Still?
The latest fare-cutting moves conjure up the image of a couple of dozen CEOs lining up on the beach at a Caribbean resort, waiting their turn to do the limbo.
How low can they go?
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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Consider US Airways' latest sale, this one dubbed the "Escape the Cold. New Year Sun Sale." For $118 round trip (that's $98 plus taxes), the airline will fly you nonstop, in a bit over two hours, from Reagan National to Tampa.
That matches Greyhound's advance purchase price for a pair of 21-hour bus rides from Washington to Tampa (food stops included).
How low, indeed, can these airfares go?
"Lower," said Darryl Jenkins, visiting professor at Embry-Riddle Aeronautical University in Daytona Beach, Fla. "I'm pretty sure that the fares have not bottomed out."
And that worries him.
"We have way too many very low fares out there right now," he said. "And until we get rid of those lowest fare levels, the airlines will continue to lose money. There's no reason for an airline to price its product lower than the cost of producing."
Michael Linenberg, an analyst for Merrill Lynch & Co., said industry-wide adoption of Delta's plan could mean as much as $3 billion less in annual revenue for all U.S. airlines.
"Trading airline stocks may be hazardous to your wealth," UBS's Ashcroft has been warning investors in his research reports.
Delta's revamped pricing structure should bring nothing but smiles to travelers, who may now have a fighting chance of deciphering the options that are available.
As recently as Tuesday, Delta was offering dozens of different fares on many of its routes.
Under "SimpliFares," the carrier has six economy fares and two first-class ticket prices in each market. And one-way fares will be no higher than $499 for coach and $599 for first class.
If that still sounds a bit pricey, consider this: As recently as Tuesday night, Delta's walk-up fare for a Atlanta-San Diego round trip was $2,262.
Wednesday morning, the fare dropped to $888.
