Delta cuts fares to regain customers

ATLANTA - Delta Air Lines Inc., the nation's third biggest carrier, is cutting its most expensive fares by as much as 50 percent nationwide and eliminating other restrictions in an effort to woo business travelers and other last-minute ticket buyers as it struggles to avoid bankruptcy.

No fare will be higher than $499 one-way in coach class or $599 one-way in first class under its new program, Delta said in a statement and a two-page advertisement in several newspapers Wednesday.

It's not clear how much the changes at Delta will catch on at other major carriers, and there were no immediate announcements by other major airlines that they would match the cuts.

Rival Northwest Airlines Corp., the No. 4 carrier, said the effects of the Delta fare cut would hurt industrywide revenue.

Delta also reiterated its plans to charge $50 instead of $100 to change tickets and said it would eliminate a Saturday-night stayover requirement for qualifying for a cheaper fare. That last option had been previously available only on flights from Cincinnati where the program has been tested for several months. Cincinnati is Atlanta-based Delta's second-largest hub.

Leisure travelers are not likely to be big beneficiaries of the fare cuts, said Terry Trippler, an industry expert in Minneapolis who runs an airline information Web site. They often buy their tickets well in advance of their trips.

"John and Mary who want to go see their grandkids in San Francisco, and they got a $250 price yesterday. If they think it's $125 today, they're in for a surprise," Trippler said. "But now, Mary going on a business trip at the last minute who was quoted $1,200 round trip yesterday may get $600 round trip today. It kind of depends on who you are and where you're going."

Delta spokesman Anthony Black agreed that business travelers will see the most benefit from the changes, but he stressed that Delta's fare structure is getting simpler to allow it to compete better with discount carriers like AirTran Airways.

For example, he said, the most a coach class traveler will pay for a one-way fare from Atlanta to Seattle is $499; before it was $1,145. A first-class traveler on that route will pay at most $599 one-way; before it was $1,245.

Delta's shares sank nearly 7 percent, falling 46 cents to $6.85, in morning trading on the New York Stock Exchange and rival airlines shares also were sharply lower.

Northwest Airlines shares were down $1, or 10.4 percent, at $8.64 on the Nasdaq Stock Market. Continental Airlines Inc. shares fell $1.12, or 9.2 percent, to $11.08 on the NYSE where American Airlines parent AMR Corp. was off 92 cents, or 9.2 percent at $9.09.

Trippler, the industry expert, said only time will tell whether the plan works for Delta.

"Unless the average price paid increases eventually, this will fail," he said. "If you're losing money now, you can't lower your fares."

The airline got a $1 billion concession from pilots, and a big loan from American Express, to avoid bankruptcy late last year, but analysts have warned that deep changes are needed to make Delta viable in the long term.

Delta says it will unveil other changes later this year such as improving its Web site and revealing new employee uniforms. The company also said it is redesigning aircraft cabins to make them brighter and give them all-leather seats.