This article from NYTimes.com has been sent to you by psa188@juno.com. United Sharply Reduces Many of Its Unrestricted Fares January 7, 2003 By EDWARD WONG United Airlines said yesterday that it had cut unrestricted fares on direct flights out of Chicago and Denver and on thousands of connecting flights in smaller markets. The move by the airline, a unit of the UAL Corporation, signaled a willingness to experiment with lower fares for business travelers. Many walk-up fares with no restrictions, the kind often paid by business travelers, have been reduced by 40 percent, with some cuts as much as 60 percent. As an example, the one-way walk-up fare between Chicago and New York will now be $359, half of what it had been. Industry experts said the move by United represented the first widespread effort by a big network airline to simplify parts of its fare structure by bringing unrestricted fares closer to those commonly paid by leisure travelers. American Airlines, an AMR unit, and Delta Air Lines have both experimented with their fare structures, but their moves affected fares in a handful of markets. By contrast, United said it was reducing full fares in 12,500 markets. For now, it is concentrating the cuts around Chicago and Denver, two hubs where it faces some of its strongest competition. United, which filed for bankruptcy protection on Dec. 9, is fending off American and several low-cost carriers in Chicago, while it is losing market share to Frontier Airlines in Denver. A United spokesman, Joe Hopkins, said the airline had been testing its cheaper unrestricted fares for the last year in a few markets and had decided to expand the experiment. "We think it generates additional business for us," Mr. Hopkins said. "We tried this on a limited number of markets out of Chicago. We've been pleased with what we've seen, and we've been tweaking it along the way." United also said it would make further cutbacks in its food service on many flights starting today. The airline had already eliminated hot food in economy class on many routes after the terrorist attacks in September 2001, but the latest cutbacks will affect travelers in business and first class. For example, on all North American flights except transcontinental routes, hot lunches in those classes of service will be replaced with a deli and salad plate. Mr. Hopkins said that the changes would affect 210 flights daily and that this scaling down of food service was expected to help United reach monthly cash-flow figures required by its lenders. As for the fare reduction, industry experts said it was not a true simplification of United's complex fare structure because the changes had not been made systemwide. In fact, some argued that the reduction added another type of fare. But in the markets where the reduced fares have been introduced, United has compressed the gap between walk-up prices and those paid with an advance purchase. Joe Brancatelli, an advocate for business travelers, who writes an online newsletter, offered a mixed reaction. "I think fare cuts are good," he said. "I want to encourage this. United has admitted they've done something wrong." But because the cuts did not simplify the overall fare structure, "this won't fix the problem," Mr. Brancatelli said, adding: "This is a bandage on a gigantic sucking chest wound. They have to get to a situation where they have four or five tiers of fares." Jamie Baker, an analyst with J. P. Morgan Chase, said the revenue of carriers operating in the markets where United is cutting fares represents 32 percent of total domestic sales. In the short term, he said, United's fare-cutting will have "negative revenue and earnings implications for the industry." American and Continental Airlines have already moved to match United's lower fares, Mr. Baker said, while Delta has matched them in a handful of markets. "By no means have we arrived at a simplified, value-enhanced fare structure, at least not yet," Mr. Baker said. "But with United's action today, we've moved substantially towards that goal." Hal Rosenbluth, chief executive of Rosenbluth International, a corporate travel-management company, said United's fare cuts should stimulate business travel somewhat, but not too greatly. Businesses that already have deep corporate discounts with United will probably not be swayed very much by the cuts, he said, while smaller companies without discounts will find the cuts more appealing. As for the elimination of some hot meals, many analysts said travelers would probably not miss this service as long as United lowered its fares to meet those of the low-cost carriers, which do not offer food. But if fares remain considerably higher than those of Southwest or other discount airlines, then people might ask why they are not receiving food and other perks for the higher fare. Still, "I just think meals are a thing of the past," said Raymond L. Neidl, an analyst at Blaylock & Partners. "People can buy their own food. What's common now are the sacks you can bring on board." http://www.nytimes.com/2003/01/07/business/07AIR.html?ex=1042949432&ei=1&en=53fb09f322ab5354 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