Delta to slash fares, ease restrictions

/ Source: The Associated Press

Delta Air Lines Inc. will slash fares by as much as 60 percent in a bid by the struggling carrier to lure back fliers, according to published reports. Its shares were up about 2 percent in midday trading Monday.

Delta wouldn’t confirm or refute a report in Time magazine that it plans to replicate nationwide its fare-cutting plan that it began testing last August in Cincinnati when domestic flight fares were capped at $499 for economy seats and $599 for first-class seats.

The magazine and The Wall Street Journal, both citing unnamed sources, said the nation’s third-biggest airline would roll out a new, simpler pricing structure and eliminate some unpopular requirements, such as Saturday-stay rules. The airline also plans to cut ticket-change fees from $100 to $50, Time said. International flights will reportedly be unaffected.

The changes won’t necessarily mean cheaper fares for everyone. Instead, the plan is to streamline fare prices so they won’t fluctuate as much, the reports said. In Cincinnati, for example, the SimpliFares program reduced the option for ticket prices to six, down from as many as 40 for some flights.

Asked about the reports, a spokeswoman for Atlanta-based Delta, Benet Wilson, said Monday, “We have not announced any changes in the fare structure and we do not make public statements about fare structures before they are made public.”

But at least one travel agent noticed a change early Monday. Jean Pickard, owner of Explorations Travel in Atlanta, booked a business flight from Atlanta to Richmond, Va., for a client who regularly pays $607 for the flight because she doesn’t want to stay over Saturday night. Monday the same flight cost $270.

“I said, ’I don’t know what they’re doing.’ She said, ’I don’t either, but I like it!”’ Pickard said.

Pickard said Delta needed to do something to woo customers — “There’s a lot of people they’d frankly ticked off in the past few years” — and thought the changes would cascade down to all legacy carriers.

“I think everyone’s going to have to match it,” she said.

Delta avoided a bankruptcy filing in October when its pilots approved a $1 billion concession, but the airline is still struggling. Some analysts say the deal, along with new financing from some creditors, only gives Delta about 12 months of breathing room. They said the airline still needs to increase its revenue and execute its broad turnaround plan.

Last month the airline announced a raft of changes to its frequent flier program, ranging from making it easier to get upgrades to simplifying fees, in hopes of winning back customers angered by previous changes to the program.

The Cincinnati fare-cut experiment dropped some fares by several hundred dollars. Last-minute walk-up fare from Cincinnati to Los Angeles went from $1,202 to $499, and from Cincinnati to Las Vegas from $1,032 to $479. Wilson wouldn’t say whether the new fare pricing system would be similar.

An airline industry analyst said Delta’s hoping its Cincinnati success — happier customers and bigger market share — will be repeated elsewhere.

“With the success they’ve had in Cincinnati, this is no surprise,” said Ray Neidl of Calyon Securities. “The whole sector domestically is moving in that direction. The old fare structure is not going to survive in the future.”

Another change reported by Time is a new flight schedule, an attempt to reduce delays. Delta will add 81 new flight and seven new destinations from Atlanta, Time reported.

The reported changes would make Delta more like a low-cost carrier. It created a subsidiary, Song, just for that reason, but a spokeswoman for Song said Monday that she didn’t think any changes Delta may announce would mean Song would be phased out. “I think there’s definitely room for both of them,” Song spokeswoman Julie Horn said.