Airlines: Dumping the Discounts

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The battle began in 1963, when American Airlines offered half-price seats to servicemen on a standby basis. Ever since, U.S. airlines have been competing for traffic with an ever proliferating and vastly confusing array of cut-rate fares. As a result, more passengers than ever are crowding aboard planes. But the cheap promotional fares are putting such a squeeze on profit margins that last week four major trunk carriers agreed that the time had come to dump some of the discounts.

In separate petitions to the Civil Aeronautics Board, United, TWA, American and Eastern Air Lines asked permission to curtail use of the almost industry-wide "Discover America" excursion fares. Generally, such fares offer a 25% discount from regular round-trip jet coach rates, while requiring travelers to return no sooner than the following calendar week and no later than 30 days after they start. The fare cannot be used during two peak travel times: noon to midnight Fridays and noon Sundays to noon Mondays.

The First Step. Much to their dismay, the airlines have discovered that many a businessman who had been counted on to pay full fare has learned to juggle his travel to take advantage of the cut-rate schedules. TWA figures that $20 million worth of business that otherwise would have produced full fares will be diverted to discount fares this year, adding only $16.7 million to revenues. "In this respect, we've been our own worst enemies," says Executive Vice President G. Ray Woody of National Airlines. Despite a 17% rise in total operating revenues, the nation's eleven major domestic carriers and Pan American World Airways suffered a 9% drop in operating profits during the first half of this year.

It was with such statistics in mind that United, TWA and American, in addition to seeking to restrict the hours and days their "Discover America" fares may be used, proposed to abolish their $200 excursion fare for transcontinental round trips and get the price back to $217. United President George Keck describes such moves as "a logical first step" toward raising airline profits. This amounted to a broad hint that next year the carriers may ask for a general fare increase, their first since 1962.

Cupcakes in Hot Pink. For all their financial pinch, the carriers are still revving up frills and frippery to woo customers. Pacific Airlines not long ago put its stewardesses in "hot pink" uniforms and advertised them delectably as "cupcakes." Staid Northwest Airlines added a mink collar to its stewardess attire last month—and lifted hemlines just above the knee. To whip up interest in its South American routes, Braniff has just introduced such gourmet dishes as Cebiche Peruano de Pescado (raw fish steeped in lemon juice) and Arroz con Pato Chifa (marinated duckling in soy sauce with date, rice and walnut dressing) even aboard domestic flights. Reinforcing its $2,000,000-a-year take-the-wife-along campaign, United has been spending its own money to promote the availability of reduced rates for couples at the Hilton and Sheraton hotel chains and the Hertz and Avis rent-a-car companies.