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The Sky Isn't Falling on Fares
January 5, 1994 -- The experts are predicting airfares may rise by as much as six percent this year. Give or take a percentage point, however, the pricing pundits predict that every year.
Don't listen to them. There'll be plenty of airline bargains to be had in 1994. Here's what to look for.
More new low-fare airlines Against substantial odds--and in direct contradiction of the conventional wisdom--a viable crop of low-fare carriers has sprung up during the last two years. The success of low-fare yearlings like Reno Air and Kiwi International has led to the launch of other discounters with names like Valujet, Midway and Ultrair. At least a half-dozen more low-fare airlines are preparing to launch in 1994. As they begin flying, and as the existing discounters expand, there will be more low-fare options than ever before. And watch the major carriers carefully. They will match many of the lower fares promoted by the discounters whenever the newcomers add a route.
Let's hope the new start-ups are as good as Kiwi International Air Lines (800-JET-KIWI), which gets my vote as the best of the newbies. The airline's one-class service offers excellent meals or snacks on every flight, brand-name booze and extra legroom at each seat. Kiwi's fares are far lower than those of the major carriers and its prices carry no onerous restrictions. Kiwi serves Atlanta, Chicago, Newark, San Juan and three Florida destinations: Tampa, Orlando and West Palm Beach.
Expansion of the niche carriers The climate has been so conducive for low-fare scheduled airline service that four charter specialists--Tower Air, Carnival Airlines, Morris Air and American Trans Air--have been expanding their scheduled flights. These airlines offer unrestricted fares that sometimes undercut the major carriers by about 75 percent. Tower's unrestricted coach fare between New York and Los Angeles is just $179 one-way; the major carriers charge $683.
The Southwest Factor The granddaddy of discounters, Southwest Airlines, continues to add service. And where Southwest goes, prices plummet. When Southwest added flights to Baltimore-Washington International Airport last fall, for example, fares dropped by 85 percent. Southwest executives say they will speed up their expansion in 1994. To that end, Southwest last month agreed to buy Morris Air, a discount carrier based in Salt Lake City. The Morris purchase will bring Southwest's brand of cheap, efficient, nonstop service more than a dozen additional cities.
The Empire Strikes Back It has taken time, but the nation's major carriers have finally realized leisure travelers only fly when fares are low. So to stem defections to the discounters, the majors have begun to reinvent themselves. Continental launched its low-fare subsidiary, Continental Lite, in 13 cities last fall, and is planning to expand it this year. Two of the three largest airlines, Delta and United, say they too are studying ways to launch low-fare flights.
Watch the Fare Wars No matter what the major airlines say, what they do is fight fare wars. This year's first fare war--for travel through March--was actually launched last year. During the rest of 1994, fare wars are likely to slash ticket prices by as much as 35 percent. But watch the purchase dates carefully. Some of the best fare wars may only last a week.
This column originally appeared in Travel Holiday magazine.
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