American Airlines slashed its fares to Miami yesterday by as much as 85 percent from airports in several cities, including Reagan National in Washington, possibly setting off a winter fare war on routes to Florida.
Other major carriers are likely to follow American's lead as they seek to win back travelers from rapidly expanding budget airlines. United Airlines is considering whether to match American's cuts, United spokeswoman Jean Medina said.
The low-fare carriers also are ready to do battle. AirTran Airways said it will remain competitive with American. "American is just responding to us. We're going to ensure that we're the price leader in the South Florida market," spokesman Tad Hutcheson said.
American, the world's largest airline, yesterday eliminated its Saturday-night-stay requirement and implemented one-way prices. The airline also reduced its fee for a change in itinerary to $50 from $100.
American cut its highest, last-minute fare to Miami from National to $109 from $712 each way. The airline reduced fares from New York's LaGuardia Airport to $209 from $836. Flights from Los Angeles fell to $289 from $478. The changes went into effect immediately.
American is trying to defend its Miami hub airport against low-fare carriers, such as Southwest, JetBlue and AirTran, that fly to nearby Fort Lauderdale. Like its rival traditional carriers, American is suffering from high fuel costs and continues to lose money. The budget airlines, meanwhile, have lured away increasing numbers of Florida-bound, price-conscious passengers in recent years.
"The customers have forced us into this action. We're reacting to the marketplace that is deciding that our fares out of Miami were too high, and people were willing to drive quite a distance to get lower fares someplace else," said Scott D. Nason, American's vice president of revenue management.
"We believe this initiative makes good business sense and will help generate traffic and strengthen our position in the marketplace," Nason said.
American may broaden the fare cuts to other routes. It has already reduced fares between Los Angeles and its Dallas-Fort Worth hub and from New York to Los Angeles and San Francisco.
American's latest fare cuts pose a new challenge to US Airways, which is staking part of its future on attracting increased traffic to South Florida. Arlington-based US Airways Group Inc., which filed for Chapter 11 bankruptcy protection in September, plans to double its Fort Lauderdale flights and turn the airport into a mini-hub as part of its reorganization. US Airways plans to increase its weekday departures to Fort Lauderdale to 64 by the end of February from 27 today.
Christopher L. Chiames, US Airways senior vice president of corporate affairs, said American is reacting to the Fort Lauderdale growth. "Fort Lauderdale has become the BWI of South Florida," he said. "It's a battleground for low fares and low-fare carriers."
US Airways was among the first of the traditional hub-and-spoke carriers to begin dismantling its long-standing fare structure with the simpler system used by the low-cost carriers. Earlier this year, US Airways introduced its "Go Fares" promotion, reducing fares as much as 60 percent at Philadelphia and Reagan National, two airports where low-cost, low-fare carriers have grown sharply.
Fare experts said travelers should expect that the fares will not apply to all seats. Terry Trippler, founder of Minneapolis-based travel site TerryTrippler.com, said the airlines will not say how many seats will be discounted on the flights.
Trippler said American will probably offer only a certain number of seats at its lowest fare of $109. When those seats sell out, the airline will charge progressively higher prices, especially on the most popular flights, he said.
Nason would not say how many seats American will sell at the cheapest rate on each flight. "We're obligated to have that fare available on a lot of seats," he said.