"It was a way to offer lower fares to leisure customers and [to] segment the market where business travelers would not want to buy that fare," Delta's Bennett said. "Business travelers did not want to spend the weekend away from their family."
Airlines also decided they would offset the discounted tickets by pricing walk-up fares five, perhaps 10 times higher than leisure fares. And there was little consistency in how the walk-up fares were priced.
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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"One of the most mystifying aspects for customers is why fares vary so widely across markets, why when you are flying, say, from Atlanta to Los Angeles you may pay $300 for a last-minute walk-up fare, but from Atlanta to San Diego you pay $1,200," Bennett said.
So why there was such a disparity in walk-up fares? Said Bennett, "Well, quite honestly, we don't have a really good answer to that."
Cristello, the BB&T analyst, said airlines "really gouged" business travelers during the tech boom of the late 1990s.
"That was the peak," he said. "Everything was ramping up and many business travelers were paying $2,000 to fly coast to coast. Times were good. Then the United pilots got a huge contract and the Delta pilots got a huge contract. The airlines had built this big infrastrasture predicated on higher fares and explosive growth in the business traveler."
The tech bust of late 2000 was followed by the terrorist acts of Sept. 11, 2001.
With fewer passengers flying, airline revenue slumped. With labor costs high, and locked in through union contracts, some airline companies, including US Airways Group Inc. and United parent UAL Corp., had little choice but to file for bankruptcy protection. UAL filed in 2002, US Airways in 2002 -- and again last year.
Discount carriers, which had lower labor costs, aggressively moved into markets dominated by the big boys.
"And now you could go to the Internet and pull up all the different flights and all the different prices," Cristello said. That's where the larger airlines really lost their edge. Suddenly, there was transparency between airlines and routes. . . . People started to look up fares on Expedia and Travelocity and all these travel search engines."
This transparency will serve travelers well in the coming months as they try to decide which makes more sense -- Delta's SimpliFares, US Airways' Go Fares or JetBlue's Take Five fares.
A quick trip to Delta.com late Friday afternoon, for example, found a round-trip fare from Dulles to Atlanta for $342.40, leaving tomorrow and returning on Tuesday.
A visit to Flyi.com, meanwhile, found Dulles-based low-cost carrier Independence Air quoting a round-trip fare of $136.40 for the same itinerary.
"I remember what Yogi Berra once said: It's hard to make predictions, especially about the future," Delta chief executive Grinstein said that recent afternoon at the Wings Club. "Excess capacity, fuel prices, the economy, developments in current as well as any additional bankruptcies, possible sales of assets, labor strikes or other actions, plus a hundred more possibilities, all could create long chains of actions and reactions within the industry."
Nonetheless, Grinstein ended his speech with a prediction.
"Change is coming, fast and furious," he said. "So have a seat, buckle up, turn off your cell phone, and enjoy the ride."
