Bargain Season

Air fares over the North Atlantic are so jumbled that Italian airline officials sardonically refer to them as "spaghetti," the Germans call them "sauerkraut" and the Americans say that they are "for the birds." Yet, after three weeks of wrangling in the usually placid Swiss town of Lausanne, representatives of the 22 scheduled lines that fly the Atlantic were unable to agree on new, uniform rates. The result last week was that the Atlantic lines began operating under an anarchy called the "open rate." That means that until they agree on rates they can charge almost any fare that they want to.

Many did just that, to the delight of travelers. Pan Am, TWA and Alitalia were selling $299 round trips between New York and Rome. BOAC offered a $260 fare between New York and London; Air Canada came in with $282 between Montreal and London. KLM announced its intention to reduce fares by nearly 50% from North America to Eastern Europe.

The fare feud stems from the rising threat of cut-rate charter flights, which last year carried 14% of the passengers who flew the Atlantic. The only way for the scheduled lines to stall the charters is to reduce their own rates. A major impediment is that many of the state-run European carriers, which dominate the International Air Transport Association, have traditionally argued for higher fares. The U.S. lines have long pressed for reduced rates, figuring that lower fares would attract more customers and ultimately increase profits. But the U.S. lines are a minority within the IATA cartel. Another complicating factor is that many airlines are going through financial turbulence and will soon be faced with paying for the giant 747 jets. U.S. carriers alone are committed to spend $5 billion for new planes and equipment by 1975.

Pan Am, which is scheduled to get the first of the new jets early next year, is in a particularly tough bind. For the first time, it has carried fewer transatlantic passengers this year than TWA. After reporting that third-quarter earnings had dropped from $25 million to $8 million, Pan Am laid off 750 employees, including 450 of its 3,600 pilots and flight engineers.

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