Delta Fare Update—Now American Sorta Matches

Likely my last daily update on this whole fare situation:

American has pretty much matched Delta’s fare cuts, eliminating Saturday night stays and reducing top fare levels.  However, American did not put a cap on its coach fares.  It also has maintained a $100 change fee in most markets.  Also, American has a separate fare structure in Miami with lower change fees.  Northwest, United and Continental have matched Delta’s new fares in some markets but not in others (Continental, for example, is still trying to get $1900 for an unrestricted r/t ticket from Newark to Houston).

Keep in mind that the elimination of Saturday night stays (both on American and Delta) has been replaced with a one-night minimum stay, a requirement most lowfare carriers do not have.  The capped top price is still higher than lowfare carriers and the change fees are still higher than lowfare carriers.

Northwest has already begun the counter-assault, offering $98 roundtrip tickets from Seattle, San Francisco, San Diego and Phoenix to Delta hubs Cincinnati and Atlanta.  This will just be the beginning of crazy low fares trying to annoy Delta.

Meanwhile, very few articles (including this pretty good one from the NY Times) spend much time talking about one major problem with these fare changes:  none of these carriers have the financial strength to actually survive massive reductions in fares.  Delta says it wants to compete better with lowfare carriers (certainly a smart move), but you need low costs to do this.  Delta is not quite there yet.  While not a math wizard, I’m pretty sure that if you lower fares without lower costs you end up with less revenue—especially when everyone else is lowering the fares—where is the advantage?  As you can tell, I’m skeptical that these fare changes will take hold across the entire industry, as nobody is in a position to ride out a stretch of lower revenues.

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