United Airlines today said its new business fare structure, since being introduced in January, is "positively impacting revenue by $20 million to $25 million per month," contrary to claims by competitors.
"Our new business fares are great for customers and good for United's bottomline," said Doug Hacker, executive vice president of strategy. "The increase in business passenger volume has more than offset the lower fares." Those lower fares--namely one-way, walk-up prices 40 percent lower than previous levels
(BTN, Jan. 20)--also are intended to protect marketshare as United reorganizes under bankruptcy protection. They are available to and from United's hubs in Chicago and Denver and in 11,500 connecting markets.
Some of United's competitors, in the weeks following the introduction of the reduced business fares, said the monthly revenue loss would be in the tens of millions. Northwest Airlines officials specifically said the level of traffic stimulation needed to offset lower business fares was not likely to occur for months
(BTN, Feb. 10).
United, however, said passengers have reacted very favorably "because we gave them what they asked for," said United senior vice president of sales and reservations Chris Bowers. Other carriers, including American and Delta, have been more guarded about recent pricing experimentation. Recent results posted by British Airways and Lufthansa suggest their new lower-fare intra-European strategies are paying off.