Last month, Delta Air Lines touched off a transformative fare war among the nation's air carriers when it announced cheaper, simpler prices—and a plan to discontinue many discounts for meetings and corporations.
The third largest carrier's new SimpliFares program caps unrestricted walk-up tickets at $499 each way for coach, and $599 for first class. The new fare system also eliminates Saturday night stay requirements and reduces change fees. Some fares will drop by 50 percent under the new program. Because the major carriers compete vigorously on price, other airlines, including American, Northwest, and US Airways, quickly moved to match Delta on a selective basis.
"We're simplifying everything about our business, including the need for very complex unpublished fare programs," Delta Senior Vice President Paul Madsen told Successful Meetings. While Delta will continue to support some unpublished programs, the carrier plans to end some 6,000 discounted deals with meetings, conventions, and corporations. Meetings typically garner five-percent discounts from the major carriers, but corporate discounts, which affect many meetings, often go as deep as 20 percent.
Delta's move reflects the big airlines' ongoing efforts to remodel themselves after their healthier, low-cost counterparts, like Southwest Airlines. Southwest has a relatively simple fare system similar to the one Delta just announced, and does not offer special discounts for groups or corporations.
The major carriers' stock prices fell on the news, reflecting concerns that the new pricing systems will not support the airlines' massive costs, particularly for fuel and labor. It's still unclear if Delta's changes will stick, or what the ultimate ramifications of the fare war will be.