Airlines: The Fight for Lower Fares

Few airlines or their passengers are happy with the tangled fare structure on North Atlantic routes. Travelers can be charged any one of more than 100 different fares to fly to the same city—depending upon their age and occupation, the starting point, the time of day or any one of a myriad other factors. Basic round-trip fares from New York to Rome, for example, range between $250 for special groups and $573 for twelvemonth economy. “When you put our present fares through a computer, they come out snarled like spaghetti,” says Fabrizio Serena di Lapigio, the marketing director of Italy’s Alitalia.

Fed up, Alitalia last month applied to the U.S. Civil Aeronautics Board, which has to approve all fares between the U.S. and foreign points, for a $299 ticket price on the Rome-New York run between Nov. 1 and March 31. Last week Pan American and TWA petitioned the CAB for an identical fare. The board is likely to approve. By acting without the consent of the International Air Transport Association, the three lines threatened the whole labyrinthine fare structure and set the stage for a searching reassessment.

Behind all the maneuvering is the scheduled airlines’ growing fear of the increasingly popular cut-rate charter lines, which offer high-season round-trip Atlantic fares for as little as $150. The scheduled carriers are particularly disturbed by abuses of the “affinity rule,” which decrees that only members of bona fide organizations can take charter flights. Recently, a group calling itself the “International Order of Old Bastards” arranged a charter trip from the U.S. to Mallorca. Unamused, Pan Am executives complained to the CAB; meanwhile the flight was canceled.

Largely to counter the charters, IATA members approved a new low-priced “bulk fare” for groups of 40 or more passengers, each of whom agrees to pay at least $100 for ground accommodations. The plan is scheduled to become effective on Nov. 1, even though some airline executives think that it does not go far enough to simplify and reduce fares.

For its part, the CAB was so deeply disappointed that it decided to allow bulkfare merchandising only through Dec. 31. After the CAB took that action, Alitalia acted unilaterally to cut fares.

IATA’s 23 North Atlantic carrier members will meet next week in Europe to work out a new fare structure. But many of the airlines are still sharply split over whether, how and by how much to change their prices. That leaves the transatlantic traveler as confused and unhappy as ever.