Airlines Launch Round of Summer Fare Cuts

Air travelers from Los Angeles to Boston are being treated to an unseasonal wave of fare cuts.

JetBlue Airways Corp. on Tuesday joined the ranks of discount carriers slashing prices for travel in late summer and fall, announcing one-way fares as low as $99 from its West Coast base in Long Beach to New York, Washington and Boston. Its Long Beach-to-Oakland fare dropped to $39 one way from $49.

Southwest Airlines Inc., AirTran Holdings Inc.’s AirTran Airways and others also have launched fare specials, cutting prices by 15% to nearly 40% on hundreds of routes. That has prompted larger carriers such as AMR Corp.’s American Airlines and UAL Corp.’s United Airlines to match the lower prices on many of their flights.

Airlines typically lower prices for the fall, when travel tapers off after the peak summer season. They also usually wait until later in the summer, closer to Labor Day, to unveil the cheaper seats.

And the sales going on aren’t limited to select pairs of cities, as is often the case. They’re sweeping and include several coast-to-coast flights. AirTran, for instance, is selling one-way seats between Los Angeles and Atlanta for $119. ATA Airlines, a unit of ATA Holdings Corp., is offering one-way fares from Los Angeles to Philadelphia for $79 based on a round-trip purchase.

The cut-rate fares are heavily restricted. Although tickets are good for travel into the fall, in many cases they must be purchased within the next few days and most require 10- or 14-day advance purchases. The Thanksgiving Day period is typically blacked out, and seats at the sale prices are limited.

Even so, the fare cuts are good news not only for leisure fliers but also for the growing number of business travelers who are scouring for cheaper flights.

“We fully embrace this,” said Wido Schaefer, president of Travel Store, a Los Angeles-based firm that manages other companies’ travel. “The discount airlines are being very aggressive.”

The trend of business travelers curbing their expenses to keep their companies competitive is here to stay, said Kevin Mitchell, president of the Business Travel Coalition, an advocacy group for business fliers.

“The pressure on these travelers to get more travel out of the same budget, or even a smaller budget, is now permanent,” he said.

JetBlue and the other low-price airlines, which now account for roughly a quarter of U.S. travel, are trying to gain market share by slashing fares.

They can better afford it. With lower operating costs than their larger peers, most of the discount carriers still turn a profit even at these prices. JetBlue’s cost of flying one seat one mile -- the industry’s measure of operating expenses -- was 6.08 cents in this year’s first quarter, and Southwest’s was 7.82 cents. But Delta Air Lines Inc.’s cost was 10.71 cents and American’s was 9.49 cents, making it harder for them to earn money during fare wars.

Southwest is expected to report a second-quarter profit Thursday of about $126 million, according to analysts surveyed by Thomson First Call. Most of the traditional airlines are expected to report more losses.

Matching the discount airlines’ fares to protect their market share only exacerbates the problem for the big carriers. The sales fill planes but don’t generate enough cash.

United, for example, last week said its planes were 86% full on average in June, a record-high “load factor” for the carrier. Yet United, the busiest airline at Los Angeles International Airport, remains mired in bankruptcy proceedings because of losses.

Even JetBlue and other discount carriers could see their profits reduced by the price cutting, analysts said. Those warnings helped send most airline stocks lower Tuesday.

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Travel deals

Some sample airfare sales (all fares are one-way and various restrictions apply)

*--* Previous lowest Route Sale fare JetBlue, Long Beach to: Las Vegas $29 $39 Salt Lake City $59 $69 New York $99 $119 AirTran, Los Angeles to: Atlanta $119 $161 Dallas/Fort Worth $89 $139 Baltimore $134 $154 Southwest, Los Angeles to: Orlando $99 $159 Oakland $39 $62 Portland, Ore. $79 $129

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Sources: The airlines