Majors Try Fresh Fare Hike, AirTran Simplifies
Days after a Continental Airlines-led fare increase fizzled—thanks to traditional spoiler and Continental partner Northwest Airlines—carriers late last week were pushing newer hikes in a wide range of markets. American, Delta and United airlines each filed $20 roundtrip increases on discounted business and leisure fares and Northwest reportedly matched in many of its markets. "Over the next couple of days, we expect to get better clarity as to who will match and how extensive this fare action will be," said Deutsche Banc Securities analyst Susan Donofrio. Meanwhile, AirTran Airways last week instated a new reduced fare structure within its business class, walk-up and three-day advance purchase ticket categories, as well as advance purchase leisure fares. Business fares were reduced by $10 to $40 and the number of walk-up fares available in each market was decreased. AirTran's move may force Delta to consider retaliatory adjustments at the mutual Atlanta hub.
GDSs Battle On Pricing Tech
Atlanta-based global distribution system Worldspan said it integrated its server-based ePricing fare search technology with its Power Pricing product, tripling the fare requests it can process and incorporating shopping requests for first class and business class tickets. Worldspan also deployed faster server technology to cut response time by one-third. Distinct from Power Shopper, which Worldspan already equipped with ePricing (BTN, Jan. 29), Power Pricing often is used in the corporate travel environment where travelers and agents want to compare prices on already-set itineraries. Parsippany, N.J.-based Galileo International recently implemented automated processing of the Airline Tariff Publishing Co.'s new Category 25 and 35 rules that allow subsets of net fares and discounts on public fares (BTN, March 4). "Our competitors try to magnify their developments in fares and pricing," said Mike Parks, senior vice president and general manager of worldwide travel distribution for Worldspan. "We launched it, we're steadily strengthening it and our rivals just aren't there yet." However, Randy Smith, Galileo senior director of product innovation, said, "They came in shortly after us on server-based stuff. "We've automated the categories they are talking about, and two new ones." Worldspan said it has automated all rules except 25, which it will make available globally in June. A Sabre spokesperson said, "The first phase of our recently announced dynamic air shopping application, which will be introduced during the second quarter, will offer agents and airlines the most advanced pricing and shopping platform in the industry. We'll also offer new low-fare search features and fare construction techniques."
Bleak 1Q Hotel Earnings Projected
With Marriott International the first of the major U.S.-based hotel companies to report first-quarter 2002 earnings, the picture remains bleak for the industry as it continues to struggle with the downturn in travel. The industry bellweather last week announced that Marriott earnings per share fell 32 percent from the first quarter of 2001, while sales dipped 4 percent. The bottom line would have been even worse, if leisure and group sales at the company's core Marriott Hotels & Resorts brand hadn't offset the "impact of continued soft business transient demand."
Amex, Cendant, Sabre Numbers Show Uptick
Three of the travel distribution business' biggest players last week cited business gains. "If the business environment continues to improve," said Ken Chenault, chairman and CEO of American Express, which reported 15 percent higher net earnings year over year for the first quarter, "we expect to accelerate investments in building business activities and to deliver solid operating results." Amex's Travel Related Services unit last week reported first-quarter net income of $467 million, down 11 percent from $522 million a year earlier, on flat revenues of about $4.4 billion. Sabre, where revenues were down 6 percent, net earnings down 1.1 percent and global travel bookings down 13.8 percent year over year, predicted 2002 revenues would grow 1 percent to 5 percent. First-quarter revenues from the GetThere subsidiary were $12 million, up 7.4 percent from $11 million in the year-ago quarter. GetThere enjoyed corporate revenue growth of more than 93 percent. Cendant Corp. reported record quarterly net income of $342 million, thanks in part to revenue gains in hospitality and the travel distribution division that includes Galileo International, which pulled in revenues of $444 million. "While the terrorist incidents of Sept. 11 caused a significant decrease in the demand for travel-related services and reduced booking volumes for Galileo and our travel agency businesses during the third and fourth quarters of 2001," Cendant noted, "travel bookings improved during the first quarter of 2002."