Delta Air Lines will cut prices for last-minute travelers in an effort to get customers back to the airline and fill flights.
Delta also plans to get rid of Saturday-night stay over requirements for all passengers.
According to an article from Sun-Sentinal.com,
“Some last-minute tickets, or those not bought in advance, will be reduced as much as 50 percent under the new fare rules, which will cap one-way economy fares at $499 and one-way first-class seats at $599.
For all fares, regardless of when they are purchased, the airline has eliminated the Saturday-night stay requirement and ticket-change fees have been reduced from $100 to $50.”
Other major airlines such as United and American have implied that they will also reduce ticket prices.
The airlines that are reducing their prices are optimistic that this will have a positive effect on long term revenue.
In a BusinessWeek article, Standard & Poor’s Ratings Services had this to say:
“Traditional hub-and-spoke airlines like Delta (the so-called legacy carriers) face a difficult choice in their revenue planning. If they change to a simpler fare structure and lower business fares, they’ll lose some revenue in the short term (as the lower pricing more than offsets some stimulation of traffic).
On the other hand, if they retain their current fare structure, they’ll gradually lose more and more customers to low-cost competitors. Low-fare airlines have caused domestic fares to drop and diverted a sufficient number of passengers so that the short-term revenue loss, while material, is much less than it would have been during the late 1990s.
Also, the long-term risk of keeping the current fare structure has increased over time, because low-fare carriers represent a more plausible alternative for business travelers than previously, and because of their greater market share, improved service offering (in some cases), and corporations’ more stringent and effective travel cost-control policies. Accordingly, the legacy carriers now stand to lose more by keeping the old fare structure.”
Chris is a staff writer for Murdok. Visit Murdok for the latest ebusiness news.
