This article from NYTimes.com has been sent to you by psa188@juno.com. 2 Major Airlines Reduce Business Fares by 20 August 7, 2002 By EDWARD WONG FORT WORTH, Aug. 6 - American Airlines and Northwest Airlines have lowered their business fares by 20 percent on most domestic routes where they compete, with other airlines matching the discounts to various degrees. The fare sale signals an attempt by the airlines to lure back business travelers who have abandoned them during the economic downturn. The fare war began late last week, when American, based in Fort Worth, offered a discount of up to 10 percent on business fares bought through some of the country's largest travel agencies. The sale was not offered through the more general computer booking system. Northwest Airlines said it heard about the discount through its corporate customers and decided to match the discount by introducing it as a systemwide published fare in the computers. After American matched that, Northwest cut prices by a further 10 percent on Monday, forcing American to match for a total discount of 20 percent on published fares. Both carriers are offering the discounts on routes where they compete with each other but not ones that fly into hub airports used by other competitors, like Continental Airlines and Delta Air Lines. But Continental and Delta have also been forced to cut prices on some of the routes discounted by American and Northwest. For example, before the sale, American had a walk-up business fare of $1,213 one-way from New York to Los Angeles, said Tom Parsons, chief executive of Bestfares.com, which tracks fares. Now, all the full-service carriers, with the exception of United, are flying that route for $983 one-way. But a business fare to Los Angeles from Newark - a Continental hub - still costs about $1,200, Mr. Parsons said. "We think it highlights the frustration of the major airlines with respect to the continued weakness in business revenues," Susan Donofrio, an analyst for Deutsche Bank wrote in an investor's note today. "We expect that we will see a number of different methods tried in the upcoming months as the airlines attempt to react to this new business fare environment." Traditionally, the airlines have relied on business fares for 60 percent of their revenue, even though those travelers make up only 40 percent of passengers. This new fare war decreases the profit they would make on each ticket. "The airlines have actually come up to the point where they've got themselves in a pretty good jam," Mr. Parsons said. Kurt Ebenhoch, a spokesman for Northwest, said his carrier was "competing for every customer we can and pricing our product competitively to do that." Last month, the major carriers offered discounts of 25 percent to 50 percent on leisure tickets. That was a sharp reversal of a strategy that the airlines tried earlier this year, when they tried unsuccessfully to raise prices on leisure fares. http://www.nytimes.com/2002/08/07/business/07FARE.html?ex=1029725537&ei=1&en=6ba2529fb628f6af HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@nytimes.com or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@nytimes.com. Copyright 2002 The New York Times Company