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Airfares losing altitude
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July 11, 2000: 3:15 p.m. ET
Southwest leads carriers in setting late summer and fall discounts
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NEW YORK (CNNfn) - On the heels of a month that saw air travel soar to records for many airlines, carriers announced fare sales Tuesday to prepare for the inevitable descent in demand.
Leading the move was discount carrier Southwest Airlines, which cut roundtrip fares to a maximum of $218, with even lower fares for flights on Tuesday, Wednesday and Saturday, intra-California travel or flights between Florida and many of its locations. Other major carriers moved quickly to match those fares.
 The Southwest sale is for travel between Aug. 14 and Dec. 9, and tickets must be purchased by July 27. Other carriers have similar advance purchase requirements. For example, U.S. Airways is requiring its tickets be purchased by July 21 for flights during a similar period.
"Is this a big deal? Yes," said Tom Parsons, chief executive of Bestfares.com. "Southwest isn't a chump. They can wreak havoc out there. The other guys are not going to sit back and let Southwest fill their planes without responding."
Parsons said that while Southwest doesn't serve many major markets like New York, Boston or Washington, the service it provides nearby in locations like Long Island, N.Y., Providence, R.I., and Baltimore is forcing fares lower even outside the 56 cities it serves.
"Washington, D.C. to San Diego was $685 yesterday. Today it's $398, and if you're willing to drive up to Baltimore it's $198," he said.
But airline analysts said they aren't terribly worried about overall revenue dropping because the deadline for ticket purchase rules out many business passengers who pay the top dollar for seats.
And while some holiday periods such as Labor Day and Thanksgiving are included in the discount period, the number of low fare seats available is likely to be limited during those days.
"It's not as if the entire airplane is for sale," said Jim Higgins, analyst with Donaldson Lufkin and Jenrette Securities. He pointed out that airfares have risen steadily this year in the face of rising fuel prices and strong demand for seats. Higgins and other analysts said these kinds of seasonal sales were bound to happen and were fully factored into revenue and earnings forecasts.
"I'm hearing absolutely nothing from any airline about a drop in revenue," Higgins said. "Bookings have remained very strong. I was just at Southwest last week. They were virtually giddy over how strong their revenue figures are. This is a seasonal issue."
Parsons agreed there's no sign of a slowdown in air travel. He said that while many carriers set traffic records in June, those records could be topped this month.
"July will be an interesting month. The planes are jam-packed like cattle cars," he said. 
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