Continental Airlines, fighting to regain business travelers soured by the airline's deteriorating service, yesterday moved to sharply reduce unrestricted fares in targeted business markets.
The move immediately set off a limited fare war.
The Texas Air Corp. subsidiary said it would cut fares between its hub at Newark and seven cities, including Chicago, effective today.
Continental dropped its unrestricted fares in that market to $95 during peak flying times and $75 during off-peak hours, compared with its current lowest unrestricted fare of $199.
American Airlines and United Air Lines, which also fly that route, said they would reduce their fares, but not as much. The two airlines said they would reduce one-way, unrestricted peak fares to $105 and off-peak fares to $85.
"It's simply because we have a much better product and much better service than Continental," said United spokesman Dan Sheehy.
The other markets in which Continental cut fares pit the airline against smaller competitors -- USAir Corp. and Piedmont Aviation Inc.
Continental cut fares between Newark and Rochester and Syracuse to $60 peak and $40 off-peak. Fares between Newark and Pittsburgh were cut to $70 and $50, and fares between Newark and Indianapolis were dropped to $95 and $75.
Continental also said it would cut fares to Norfolk to $60 and $40 and fares to Charlotte, N.C., to $80 and $60.
USAir and Piedmont said that they would match the cuts. "We've always been competitive with their prices and more than competitive with their service," said Piedmont spokesman Don McGuire.
USAir also will extend the fare cut to additional cities -- Buffalo, Burlington, Cleveland and Columbus. Passengers who bought advance purchase requirement tickets that are now more expensive than the unrestricted fares will be allowed to to trade them in, according to Nancy Vaughn of Piedmont.
The fares that Continental targeted are the bread-and-butter fares for the airline industry -- unrestricted coach fares. Those fares are generally kept reasonably high because they are heavily used by business travelers, who often need to fly on short notice and who are less concerned about price than other passengers (since someone else is usually paying the fare).
Continental is concerned with the loss of the business traveler. The airline hopes to attract the business traveler with the aggressive price cuts.
"These new unrestricted fares provide a powerful incentive for business travelers to experience Continental's quality service and performance," said Doug Birdsall, senior vice president for marketing and planning for the airline.
At the same time Continental is cutting fares, it also is mounting an aggressive advertising campaign to persuade the flying public that Continental has recovered from the trauma of merging four airlines into one and now offers service comparable to or better than its competitors.
Continental's competitors, on the other hand, are busy talking about their own service and have raised some fares to levels slightly above Continental's -- betting that travelers will pay a little more to avoid Continental.
"The message to consumers is that Continental wants to get the business traveler back," said Paul P. Karos, vice president of L.F. Rothschild, Unterberg, Towbin Inc.
Karos said he did not expect the fare cuts to expand beyond the airline's Newark hub. Newark was the source of Continental's worst problems in the early days of the merger and was so bad that many corporate travel planners said they book around it. Now, Continental wants to "get the traveler back to Newark, to show people that their service has 'improved.' "