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United cuts business fares
October 2, 2001: 7:31 a.m. ET

Move is effort to win back travelers as airlines release weak traffic data
By Staff Writer Chris Isidore
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NEW YORK (CNNfn) - United Airlines has announced deep fare cuts in an attempt to get crucial business travelers back in planes.

The move late Monday evening came as the National Business Travel Association announced that a survey of its members taken last week found that 70 percent expect a recovery in business travel within the next three to six months, although 18 percent expect a recovery to take 10 months or longer.

The survey found that new security measures, discounted fares and a lessening of advanced purchase and Saturday night stay provisions for the cheapest fares to be important factors in the resumption of business travel.

The United fare cuts give business fliers some of those things, but not all. In order to qualify for the 50 percent fare cut customers still must book 21 days in advance. A Saturday stay is not required, but a one or two day stay is. United also is offering a 25 percent fare cut for those buying tickets 10 days in advance. Travel must be completed by Dec. 31.

"In response to customer needs, United is now offering more choice and flexibility when traveling for business," said Patricia Mash, vice president of revenue management for United, a unit of UAL Corp. (UAL: Research, Estimates).

Other major airlines had yet to announce a response to United's fare cuts as of early Monday. Before United's announcement, regional carrier Midwest Express (MEH: down $0.44 to $10.16, Research, Estimates) announced fare cuts and fewer advance purchase requirements in some of its markets. Privately held Las Vegas-based National Airlines is offering $1 fares on Tuesday, with return fares of $99 or less.

AMR Corp. (AMR: Research, Estimates), the world's largest airline company, announced early Tuesday that members of its frequent flier programs will get double mileage for travel before Nov. 15 on its American Airlines, Trans World Airlines and American Eagle units. It also cut the number of miles needed for members to get free tickets.

American on Monday also became the first major airline to announce the resumption of curbside check-in. The airline said it has implemented new procedures that will meet tougher security requirements.

Travelers returning to the skies will find fewer flights to choose from. United said Friday it is cutting its schedule from the current reduced level. And the airline said Monday it is using smaller regional jets operated by United Express to serve six cities previously served by mainline United jets: Allentown, Pa.; Knoxville, Tenn.; Norfolk, Va.; Portland, Maine; Raleigh/Durham, N.C.; and Santa Barbara, Calif.

Despite losses and the decision to lay off about 20,000 employees, United is proceeding with plans to buy and sublease a fleet of corporate jets -- although the Wall Street Journal reported Tuesday that it is seeking an equity partner for the venture to take some of the burden for future funding.

Demand for full-priced business travel already was sharply lower even before the Sept. 11 terrorist attack, a fact that had put the industry on course for $3 billion in losses even before the current crisis.

For more on the airline crisis from Fortune magazine, click here

The first set of September traffic reports from major airlines confirmed the sharp drop in flying during the month. American Airlines miles traveled by paying passengers fell by just over a third to 6.1 billion miles from 9.2 billion miles in September 2000. The airline's capacity, a measure of miles traveled multiplied by available seats, was off 22.3 percent to 10.3 billion from 13.2 billion. That reduced its load factor by 10 percentage points to 59.6 percent from 69.8 percent a year earlier.

No. 5 Continental Airlines (CAL: up $0.77 to $15.77, Research, Estimates) also posted sharply reduced traffic. The carrier announced a 31 percent decline in miles traveled by paying passengers to 3.6 billion, a nearly 19 percent drop in available seat miles to 5.9 billion, and a decline in load factor to 60.4 percent from 69.5 percent a year earlier.

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Continental released weekly numbers that show some signs of traffic recovering. The week of the attack, Continental was able to operate only 32 percent of its expected capacity and reported a 62 percent load factor for the period. The week of Sept. 17 to 23, when it was operating about at 80 percent of its normal schedule, it had only a 50.4 percent load factor. Last week, when it operated roughly the same schedule, its load factor rose to 54.1 percent. graphic


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