2 Rivals on Tail of Continental With Own Fare Increases

The airline industry began falling into line Wednesday behind Continental Airlines’ announced increases in its discount fares, but some analysts predicted that the new round of hikes will not hold up for long.

Although the analysts and some competitors disagree, Continental said it has not really raised its MaxSaver discount fares but has simply restructured its fare schedule. “The fares were no longer representative of the distance people are traveling,” David Messing, a spokesman for Continental, said. “We simply realigned our mileage table.”

Messing said some fares will rise when the new schedule goes into effect Nov. 23, others will drop and some will remain the same.

Late Wednesday, Delta Air Lines and United Airlines announced that they would match Continental’s new fares. Delta said it was lowering about a third of its fares and raising about two-thirds. United spokesman Charles Novak said the average increase would be $15 a ticket.

The discount fares being raised are on tickets used by nearly 25% of air passengers and are most often used for leisure, rather than business, travel. To obtain the discount fares, travelers must buy non-refundable tickets 14 days before the flight and must stay over a Saturday night.

Continental’s Messing gave three examples of his airline’s fare restructuring:

The MaxSaver fare between Los Angeles and Newark, N.J., during so-called off-peak times will rise to $179 from $159. Peak period fares will increase to $199 from $184.

The off-peak fare between Phoenix and Tampa will drop to $159 from $174. The peak fare will decline to $179 from $204.

The fare between Boston and Dallas is among those that will not change.

The fares quoted are for one-way trips, but to obtain the discount fares a passenger must buy a round-trip ticket.

Thomas Parsons of Arlington, Tex., who publishes a monthly air-fare information booklet called Best Fares, said he doubts that the fare hikes can be sustained. “The carriers have high bookings between now and Christmas,” he said. But “come January, once the traffic stops, I believe the airlines will have to do something to tempt the customers to get back on the plane.”

Most other observers agreed. Raymond Neidl, an analyst with the New York brokerage of McCarthy, Crisant & Maffei, said, “When January traffic falls off, there will be some kind of a deep discount that everyone else will match.” Robert Decker, airline analyst with Duff and Phelps in Chicago, said he expects fares to come down again at the start of the year. “I am expecting the usual winter sale,” he said. “It has been announced every January for the last couple of years.”

But Edmund Greenslet, who heads Connecticut-based ESG Aviation Services, a consulting firm, said airline passenger traffic has risen sharply in the past few months and that the new fare hikes are “the culmination of a series of little increases. I don’t think we’ll see them running away from these prices very soon. It would take a disaster for them to roll them back.”

But there was some confusion concerning Continental’s move. Alton Becker, a spokesman for American Airlines, said: “We don’t totally understand what Continental has proposed. We don’t yet know if it makes sense at all from our perspective. We will gather as much information as we can and then we will decide if we want to consider any changes.”