Airlines suspend discounted e-fares, grapple with new schedules

Several airlines have suspended their discounted electronic fares while trying to adjust to the new way that air travel will operate after last week's terrorist attacks, which involved four commercial airliners.

American Airlines Inc., Delta Air Lines Inc., United Airlines Inc., US Airways Group Inc. and TWA LLC have posted announcements on their Web sites indicating that their Web-based fares have been temporarily suspended. Northwest Airlines Inc. and Continental Airlines Inc. both appear to be offering Web fares, based on information on their sites. Officials at United, American and US Air couldn't be reached for comment by deadline.

The suspension of reduced fares for tickets purchased online is probably a way for the airlines to regroup after the chaos of last week, said Kate Rice, an airline analyst at PhoCusWright Inc. in Sherman, Conn.

"They're just curtailing stuff across the board. I think a lot of it is just discovering what the new 'normal' is. They are all cutting service by [at least] 20%, and there's some speculation that this is just the first go-round," Rice said. With reduced schedules, massive layoffs and stricter security, the airlines need to run as basic an operation as possible until they know how air travel will function, she said, adding, "You simplify where you can."

This is not, however, a move to make more money, she said, since the airlines were already hurting from a slowed economy and the Web fares were a way to attract travelers at a lower cost to the airlines. Making the transaction online is cheaper for an airline than having a customer call an toll-free number or go to a ticketing office.

"They've needed to make money since January. And those e-fares are basically an effort to get people to buy online," Rice said.

For the travel industry, last week's attacks and the resulting airport shutdowns have had a severe economic impact. Continental announced that it will lay off 12,000 employees. Chicago-based aircraft maker The Boeing Co. yesterday said it will lay off 20,000 to 30,000 workers, and Web travel companies like Expedia Inc., Travelocity Inc. and Orbitz LLC all reported drastically reduced purchasing volume since last Tuesday (see story).

At the same time, the reservation systems that handle ticketing have been expanded to deal with the added volume of requests for flight information from travelers rebooking or canceling flights (see story).

While fear of flying is one reason for the drop in bookings, it isn't the only one.

"Folks may have decided to only take essential trips or canceled shorter flights rather than spending three hours at the airport for a one-hour flight, for example," said Expedia spokeswoman Christina Kozloff. "The airlines have also cut flights by about 20% overall and changed schedules, limiting flight choices for future bookings. And, of course, many folks were so riveted by the horrible events of last week that they probably weren't really thinking about anything else, like booking travel."

"Overall, it's not possible to point to any one factor as the root cause, since it was most likely a combination. And since our customers do not tell us why they were or were not booking, we just cannot know for certain," Kozloff said.

But, Rice noted, the number of people who are booking travel is higher than she expected, given the circumstances. Already, Expedia and Travelocity have announced a rise in bookings.

"Since Sept. 11, we have already seen bookings rise to more than 50% of prior levels compared to 30% to 40% immediately after the events, and we fully expect improved growth in travel spending in 2002," said Travelocity President and CEO Terrell B. Jones.

Copyright © 2001 IDG Communications, Inc.

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