The Civil Aeronautics Board tentatively decided yesterday to give airlines more freedom than they have ever had to raise and lower fares without government intervention.
The action, when final, can be expected to further intensify competition among the airlines for the consumer travel dollar.
At its meeting yesterday, the board instructed its staff to draw up a formal order - a task that often takes months - which would allow the airlines, without board approval to:
Cut normal fares by as much as 50 percent below a maximem ceiling, which would be set at existing normal coach levels.
Cut fares by an additional 20 percent with the limit based on the routes of each carrier's choosing.
Raise fares by up to 5 or 10 percent, with the limit based on the a-amount of competition on the route affected. The more nonstop airlines serving a particular route, the more flexibility airlines on that route would have to raise their fares.
The tentative decision by the board would formally abandon many of the principles upon which the agency has approved and disapproved fares in the past decade, and would usher in significant deregulation of the board's traditional ratemaking functions.
By vacating its previous requirement that the airline charge identical fares for all routes of equal distance, the decision is expected to encourage airlines to lower fares on routes where lower costs or other factors make that more feasible than on other routes.
The board's action also will forsake a policy mandating that first-class fares be set at a certain percentage higher than regular coach fares - a move which would give the carriers more freedom to experiment with different levels of quality of service and price.
Under the leadership of its current chairman, Alfred E. Kahn, the board has been abandoning past principles on an ad hoc basis, but in April proposed this new domestic fare policy to codify its current thinking. At yesterday's meeting, hope was expressed that the new policy could be voted formally by the board by the end of the summer.
Although a carrier would still have to notify the CAB of its proposed changes, as it does under existing statutes, it would not have to file the extensive economic justification current required if the fare was in the so-called "suspend-free" 50 percent zone. If an airline challenged another's fares, the complaining airline would have the burden of proving that the fare was not justified, according to CAB staff.
Airlines would be allowed to freely match their competitors' fares, but would not be allowed to do so on the basis of "short-notice" filings currently in practice. In order to encourage innovative fares, the board would require a competing airline to wait the statutorily require 45 days before putting a fare into effect and would not approve matching fares on "short notice."
The new fare policy would apply in the 48 contiguous states.