=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SFGate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2004/05/12/f= inancial1009EDT0054.DTL --------------------------------------------------------------------- Wednesday, May 12, 2004 (AP) Coast-to-coast fares drop to new lows SCOTT MCCARTNEY, The Wall Street Journal (05-12) 07:09 PDT (AP) -- Susan Gladstone flew from Los Angeles to New York last week to show off her infant son to friends and family. Round-trip fare: $224 on United Airlines. "I didn't need to go," she says, "but it was an offer I couldn't pass up= " Thanks to a brutal fare war between discounters and the old-line airline= s, flying between the coasts now is the best bargain in the skies. You can spend more on a single night at a Disneyland hotel or a New York-Washington train ticket than it costs to jet across the country and back. In fact, airlines currently charge more for the 190-mile flight between Boston and New York than the 2,456-mile trip from Los Angeles to New York. For years, the big carriers have been able to keep fares high on these heavily traveled routes because they've had the market largely to themselves. The discounters favored short routes and small jets, such as the Boeing 737, that didn't have coast-to-coast range. Now, the low-cost airlines, armed with planes that can fly farther on a tank of gas, have decided that the busy transcontinental market is their next big growth area. If airlines drew a line in the sand, this would be it: Both sides badly need coast-to-coast routes, and seem steeled for a long fight. The traditional airlines not only are matching the discounters' prices extensively, but they also are adding additional flights on those routes. Tuesday, for example, American Airlines, United, Delta Air Lines, America West Airlines and JetBlue Airways all had lots of seats available at about $220 for trips booked just seven days in advance with a Saturday night stay. Memorial Day weekend wasn't much more expensive. Leave Los Angeles on Friday, return Memorial Day and pay $310 for nonstops on America, United and America West, or $329 on JetBlue. All of this is exactly why it's so hard to make a profit in the airline industry. Douglas Parker, America West's chief executive, notes that if Wal-Mart builds a store across the street from a Safeway, Safeway doesn't turn around and build a second store at the same intersection. But when new airlines start flying routes, the bigger carriers quickly add flights there as well. Indeed, there's been a huge escalation in capacity on these cross-country routes. In June, the number of seats between Boston and Los Angeles-area airports will be more than double what it was in June of last year, according to J.P. Morgan Chase & Co. Capacity also will have doubled on the New York-San Diego route, taking into account all New York airports. Boston-San Francisco will be up 63 percent. Washington-Los Angeles, New York-San Francisco, New York-Seattle and San Francisco-Washington all will have at least 20 percent more seats available this June. And New York-Los Angeles, the biggest and most mature of all the transcontinental markets, will grow by 14 percent. That's more than 3,000 additional seats flying between the two cities each day. With all those seats to fill, airlines are having to cut fares to ridiculous levels. Two decades ago when Braniff International was in its dying days, it offered a last-gasp sale of $99 (each way) anywhere it flew. Today, you can easily get a flight clear across the country for about $100 each way -- that's half the Braniff fare if you take inflation into account. Of course, even with the extra seats, the lowest fares may not be available on the exact flights you want. Even last-minute fares have come down dramatically. Once priced at more than $2,000, the most-expensive coach ticket I could find for a New York-Los Angeles round-trip leaving tomorrow and returning Friday was a $972 fare offered by Continental Airlines. But there were even cheaper offerings than that for business travelers. Tuesday, you could book the same days for as little as $372 on American, flying into Orange County, Calif. JetBlue Airways, which was among the first to spot the opportunity to mo= ve into transcontinental routes, already has 53 percent of its capacity on coast-to-coast flights. Other discount airlines rapidly are jumping into the fray. America West Airlines upped the ante this year when it decided to deploy four 124-seat jets between both Los Angeles and San Francisco, and New York and Boston. Meanwhile, Atlantic Coast Airlines, now a feeder carrier for United, pla= ns to start flying cross-country routes when it relaunches itself as low-cost Independence Air. Aircraft makers have suggested that Richard Branson's planned startup, Virgin USA, also is aimed at these markets. Southwest Airlines, too, is adding to capacity on these long domestic routes. The old-line carriers, instead of retreating or choosing to match the lower fares on a limited basis only, are aggressively going after these travelers. AMR Corp.'s American Airlines, in particular, has added capacity and enticed customers with special sales and frequent-flier bonuses. "These transcon markets are a perfect example of where we have made a decision to stand and fight," says Gerard Arpey, American's chief executive. With prices so low, airlines have said they are losing money on transcontinental routes. Continental said that in February, its unit revenue in transcontinental markets fell 25 percent to 30 percent. And those markets accounted for 12 percent of its domestic capacity in that month, up from 9.8 percent in February 2003. Travelers such as Robert Preece are one reason why. He flies from Los Angeles to New York several times a year for pleasure, and often buys a first-class ticket because he's 6-foot-5. When he saw a $216 coach fare on American, his wallet outvoted his knees. "It was too cheap to pass up," s Mr. Preece. "I was very surprised." Ironically, even JetBlue, which triggered much of the fare war and is mo= re dependent on coast-to-coast travel now than any other carrier, has been feeling the pinch of low prices. Still, none of the airlines shows any sign of capitulation. There won't = be any retreat in summer when planes are full. Beyond that, these routes are just too important to both sides, and that's great news for travelers. This is one air war that likely is going to go on for a long time. Cheap Seats A sampling of some of the new low fares on coast-to-coast flights * Boston-Los Angeles: $203 American, America West, United * Los Angeles-Washington: $183 America West, Alaska * New York-Los Angeles: $203 American, America West, Delta, United * Boston-San Francisco: $222 American Note: Lowest fare offered, through June, for nonstop, round-trip service Source: Fares listed Tuesday on websites. ---------------------------------------------------------------------- Copyright 2004 AP