AA Offers Major Discounts

American Airlines plans by next month to start an unusual program to provide heavily discounted group fares in "distressed markets"--routes on which competition pushes the carrier's group-traffic market share lower than it likes.

The special fares, called "group city specials," are at least 25 percent below American's lowest applicable round-trip fares, said Penny Chen, American's manager of group and meeting sales.

New specials will be announced monthly and will be usable for travel within a year of booking the flights. Planners will have only two to three months from the time a fare is announced to lock it in, but they can get the fare in seat blocks without booking individual travelers by name.

"We know meetings are organized far in advance and we want to help planners early on," Chen said. "If we provide deep discounts in the early stages, it helps them with budgeting and makes the deals usable."

The fares should provide opportunities for significant savings because the standard group discount from American and most other major carriers is 5 percent off lowest applicable fares or 10 percent off full coach.

Some of the deals to be rolled out in February or March--depending on whether American's pilots go on strike this month--are on the following routes: Dallas-Washington, Dallas-Vancouver, Los Angeles-Washington, Los Angeles-Newark, Chicago-Atlanta, Chicago-Boston, Chicago-London, Boston-Los Angeles and Boston-London.

American's load factors on these flights are relatively low because of strong competition on the routes, not because of low demand overall, Chen noted.

"We're willing to work with meeting planners because we need to increase load factors in these cities," Chen said. "American has decided to be aggressive on the group side in getting more business for its weak markets."

The fare specials will be publicized via fax to existing clients. The airline plans to eventually post the specials on the Internet.

Observers said they don't know of such a program being offered by other major carriers. "It's unique," said Bob Moss, president of Belmont, Mass.-based Travel Intelligence, a travel consulting firm for airlines and travel agencies.

"I have not seen or heard of anything like that, and it's a substantial discount," said Chris Pentz, a Levittown, Pa.-based independent planner. "If other carriers also start offering such a program and it gets known in the industry, it could be a decision-making factor for planners."

Planners said the program could be beneficial depending upon a group's circumstances. "If you happen to have a meeting in those cities, it would be beneficial, but when attendees are coming from all over the country, a planner may not be able to use the program," Pentz said.

The special fares could be particularly useful in cases where a destination has not been selected for a meeting that's scheduled to be held three to 12 months ahead.

"Then it could work well," said Robin Almond, contract administrator at Iroquois Gas Transmission System in Shelton, Conn., "although you'd have to be on your toes and ready to change plans at a moment's notice."

"In theory it sounds wonderful, but it will depend on a number of factors," said Mari Heavey, director of meeting management at Carlson Wagonlit Travel.

Among these, she said, are "how limited the inventory is for the program and whether the discount is off midweek or other fares. There's always the gamble that a fare will appear one way to a client but then we won't be able to get that rate."

Rick Weber, American's managing director of special sales and commercial products, said there are no inventory limitations for this program. "If a plane has a lot of empty seats, there will be more available for that price," he said.

American plans to offer more products for the group market. "You'll definitely see more programs coming out this year," Chen said.