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Fearful airlines slash fares Vacation-time demand weak- Denver Post July 25, 2002

Airlines are rolling out fare sales during the height of the summer travel season, a boon for leisure travelers but a sign of desperation from the money-losing carriers.

United Airlines on Wednesday announced a Web-only sale that includes Denver fares, before taxes and charges, as low as $154 round trip to Chicago, $248 to New York and $672 to several European cities. The sale follows broader and deeper discounts launched by most carriers, including United, late last week.

Airlines typically do not cut August leisure fares because it is the busiest month for vacation travel. Yet this year demand is weak, and carriers aren't getting any relief from wary business travelers.

"All of the discounting is going on because corporate business is not coming back. Airlines are filling seats by discounting fares, both business and leisure," said independent airline analyst Ray Neidl.

Airlines posted second-quarter losses of more than $1.4 billion last week, with United losing $341 million and American Airlines bleeding $495 million. Denver's Frontier Airlines expects to report its first quarterly loss in four years next week. The carrier's average fare in June was 21 percent below the same month last year.

Frontier matched United's Internet fare sale Wednesday on its Denver flights, spokeswoman Tracey Kelly said. United's sale ends Monday and, among other restrictions, applies to tickets purchased at least 14 days in advance for travel through Oct. 8.

"It's unusual for carriers to do this much discounting in July," said Travelocity spokesman Al Comeaux. "Last week, we saw about 45,000 markets go on sale of 250,000 that we checked. That's about as big as we ever see."

Travelocity considers a route on sale when round-trip prices fall $25 or more, Comeaux said.

Robert Polk, owner of Polk Travel in Denver, said leisure and business fares alike are the lowest he has seen in several years, and not just from advertised sales. Carriers are offering batches of selected low fares each day to tempt travelers.

The current sales are short, giving travelers a week or less to make plans during the next two months. The industrywide sale launched last week ends today, while United's Web-only offering ends Monday. That matches the way leisure travelers are buying tickets, Polk said.

"People are spending, but they're spending at the last minute. They're still doing high-end trips, but three weeks instead of three months in advance," he said.

David Rojahn, owner of a Denver travel agency and president of the Rocky Mountain branch of the American Society of Travel Agents, said people remain uncertain about the economy and their own job security. They're only willing to fly for vacation if they can get a good fare at the last minute.

Yet Rojahn and others who rely primarily on leisure bookings say the fare sales aren't making the phones ring off the hook. Instead, the agency is calling customers to let them know about the deals.

He expects airlines to reduce fares even further for September travel as the anniversary of the terrorist attacks approaches and makes people skittish about flying.

"I would be surprised if there weren't some really good incentives out there this fall," he said.

Tom Parsons, chief executive of Bestfares.com, said the current fare sales are an indication that airlines are nervous about September because the discounts all extend through the month. Airlines have said they expect further financial losses in the third quarter because they don't see an end to downward pressure on prices.

"I think they're real concerned about September," he said.


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