Carriers Attack AWA In Phoenix After Fare Simplification

Described by UBS Warburg analyst Sam Buttrick as "potentially the single most important pricing move in the past decade," America West Airlines this week dramatically altered its airfare structure, a move matched thus far by competitors only in AWA's nonstop markets. AWA's restructure, just two weeks shy of the 10th anniversary of American Airlines' infamous value pricing initiative, eliminated Saturday night stay requirements and reclassified all fares into four one-way categories: walk-up, three-day advance purchase, seven-day advance purchase and 14-day advance purchase.

Speaking yesterday at BTN's Corporate Travel World, Buttrick, noting that all AWA fares were adjusted downward 40 percent to 70 percent, said other major carriers are "shocked and angry and throwing stones at Phoenix." Indeed, major carriers had matched in competing nonstop markets, but according to Buttrick, AWA will retain "a huge pricing advantage in all connecting markets."

Deutsche Banc Alex.Brown analyst Susan Donofrio also told investors of "retaliatory" activity by AWA's competitors in nonstop markets only, a development that "may force America West's hand in perhaps rethinking its new pricing structure."

On a larger scale, the move ultimately may prompt other financially strapped major carriers to adjust their pricing models, "much to the windfall of corporate travel buyers," according to one senior airline official. Travel industry executives, travel buyers and other industry observers for months have called on the airlines to fix what has been perceived as a broken pricing structure.

However, other carriers, desperate for higher yields from business passengers, may be reluctant to follow America West--a carrier less dependent on business travel--and knock down the primary "fence" between business and leisure travelers--the Saturday night stay requirement.

AWA said it is "uniquely positioned" because of its low-cost structure to "reduce its reliance on fare sales and off-tariff pricing from discount Web sites" and significantly reduce unrestricted walk-up fares.