The Frill Is Gone

For nearly two decades, the nation's airlines have tried to fill empty seats on their cavernous jets primarily by catering to the air traveler's palate rather than his pocketbook. They have wined and dined him with increasingly elaborate soup-to-nuts meal services and, while offering a variety of excursion rates, raised regular fares more than 40 times since the jets began flying in the U.S. in 1958. After the last across-the-board fare boost of 4% in November, however, customers suddenly began to rebel. Airline traffic has slumped 15% below a year ago, even though the industry has added more capacity. As a result, most major carriers are reporting losses: $55 million for TWA, for example, in January and February alone. Now the lines are starting what Eastern Tariffs Manager DeHart Clute calls an "orgy" of cut-price promotional fares in hopes of luring enough new travelers to pull the industry out of its tailspin.

Foodless Flying. "The frill is gone," proclaim full-page National Airlines ads for a new $61 New York-to-Miami fare. On flights between Miami and ten other cities, National promises passengers a 35% saving over regular coach fares--but no meal--if they fly on a jumbo jet between Monday and Thursday and book a seat at least a week in advance. National's aim, said a company spokesman, "is to stimulate people to take vacations." Although foodless flying, which saves the airline about $4 a passenger, is largely an attempt to win back customers that National lost during a three-month strike last year, Eastern, Delta, Continental and American have been quick to follow with similar fares on routes that compete with National. Says an official of Los Angeles-based Western Air Lines: "If it's viable, everybody is going to do it."

Earlier this month, World Airways, a charter carrier, proposed an $89 (plus tax) frill-less fare on regularly scheduled flights between New York or Washington and Los Angeles or San Francisco. The rest of the industry, meanwhile, is proposing and promoting a baffling array of other special fares, including discounts ranging from 20% to 45% for youths, senior citizens and travelers who book well in advance of their departures or fly at night.

Fare cutting has spread to international routes too. British Airways is considering no-frills service on its North Atlantic runs. And in Geneva last week, members of the International Air Transport Association, the rate-setting cartel for international flights, reached an agreement that will permit carriers to continue offering scheduled flights at new bargain rates of about half the normal coach fare. If the U.S. formally approves the agreement, it will allow major American carriers to meet competition from foreign airlines without starting the wide-open rate war that some executives had feared would break out over the Atlantic this summer.

In Congress, sentiment is growing to carry the discount trend to its logical conclusion and deregulate fares completely, leaving the carriers free to charge whatever they please rather than requiring them to seek Civil Aeronautics Board approval for every change. Airline leaders, however, are aghast at the thought of going that far. IATA Director General Knut Hammarskjold calls deregulation, which would affect international as well as domestic flights, "suicide." TWA Chairman Charles Tillinghast predicts that it would lead to a "breakdown of the system as we know it," and eventually to "pressure for subsidies and nationalization." Although few people are yet talking nationalization, the Ford Administration is contemplating legislation to force mergers that could bail out weaker carriers. Says Transportation Secretary William Coleman: "Somebody is going to have to take a look at the domestic airlines and decide how many there should be."

Quick Approval. The airlines" most immediate worry is neither nationalization nor deregulation nor Government-forced mergers, but the prospect that their new cut-rate promotional fares will add only to gross revenues this summer while doing nothing for profits. Many industry analysts forecast that the lines will raise their percentage of filled seats above February's 48.5%, but that since the airlines will also get less revenue for each occupied seat, they will continue flying in the red. In taking that chance, the airlines are clearly changing their operating philosophy, and the CAB may be doing so too. For years, the agency has discouraged price cutting and approved fare increases willy-nilly, bringing itself under heavy political fire for being too cozy with the industry. But it quickly approved National's no-frills fare, perhaps indicating a new recognition that the best way to fill empty seats is to offer the traveling public low prices.

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