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Europe's crazy air fares may become thing of past

A New York investment banker, Hugo Heath, says he hasn't recovered yet from his flight from Amsterdam to Copenhagen last month. While the flight wasn't extraordinary, the price tag certainly was.

Heath paid $700 round trip for the one-hour flight _ $150 more than his discount round-trip ticket from the United States to Europe.

"It was totally outrageous," he said. "But I was trapped."

While bargain-basement air fares from the United States to Europe have been plentiful for years, fares on the Continent can be more expensive than a suite at the George V.

With airlines shielded from competition by trade agreements that assure virtual monopolies on many routes, European carriers have been free to charge exorbitant fares.

But all of that may change soon.

Industry analysts and consumer groups are optimistic that as trade barriers collapse in Europe in 1992, air fares will fall as well, as airlines slug it out in fare wars like those spawned by deregulation in the United States in 1978 (although the European battles will probably be less brutal).

Indeed, cracks are already beginning to appear in the wall.

Flights between some cities, such as London and Amsterdam, are already virtually deregulated, and, predictably, fares on those routes are lower than elsewhere in Europe.

New airlines are cropping up, and carriers are flying to smaller cities and less crowded airports, not just the traditional gateways of London and Paris.

"There is certainly a more competitive spirit than there was a few years back," said John Parr, head of Britain's Air Transport Users Committee, a consumer organization based in London.

"You have a wide range of fares, increased choice of service and a lot of better deals for people who shop around for them," said Geoffrey Lipman, managing partner of Global Aviation, a consulting firm based in Washington.

Still, fares on many routes remain high. And the consumer bonanza predicted by some advocates of Europe 1992 may not fully materialize.

The fine points of deregulation have yet to be hammered out, and government-owned flagship airlines may be reluctant to relax their grip on competition. Currently, governments, in bilateral agreements and through meetings of the International Air Transport Association, tightly control the fares that airlines may charge and even the number of flights to and from their countries.

In addition, air-traffic congestion at airports in cities like Frankfurt and London make it difficult for upstart carriers to gain a foothold.

And since airlines pay more for fuel, labor and air-traffic control in Europe, the peanut fares that delighted consumers in the United States in the early 1980s, will probably never take hold on the Continent.

That said, there are still many ways for the savvy consumer to find bargains before 1992.

Many of the cheapest fares between European cities are available only in Europe, so it often makes sense to buy your ticket overseas. At least one travel agent, DMS Travel in New York, offers some clients a refund on tickets purchased in the United States if they find a better deal overseas.

London, Amsterdam and Athens are the best cities in which to find discount fares within Europe. In particular, London has the most bucket shops, or low-overhead ticket consolidators, and Margaret Thatcher's free-market politics has nurtured a number of fledgling airlines.

"The British, under Margaret Thatcher, have gone further toward liberalization than any European government," said Ed Perkins, editor of the Consumer Reports Travel Letter.

For instance, Air Europe, until recently a small charter airline, is now Britain's second-largest international carrier behind British Airways, with 300 flights a week. The airline calls itself "the first truly pan-European airline."

Unburdened by the high operating costs of the industry giants, the spunky carrier is able to offer lower fares. "They're giving us a good run for our money," said John Lampl, a spokesman for British Airways in New York.

In what many see as a model for Europe 1992, Britain and the Netherlands signed an agreement in 1985 that allows airlines serving the two countries to fly when they want and charge whatever fare they like. Similar agreements were drawn up for flights from Britain to Ireland and Belgium.

"There is little incentive to reduce fares if there is no competition," said Alex McWhirter, an editor at Business Traveler, a London-based publication.

"It takes another airline to ruffle the feathers of the big boys."

Still, fares on these newly deregulated routes are comparatively higher than fares for similar distances in this country because of factors such as higher fuel costs and fees for air-traffic control. (In the United States, air-traffic control is provided by the government at no charge to the airlines, whereas in Europe individual airlines are assessed for air-traffic control operations.)

As one example, an unrestricted one-way fare from London to Amsterdam, a distance of 217 miles, costs $171, while a ticket from New York to Washington, 215 miles, costs $119.

The conversion of prices to dollar amounts was made in the last week of September, but fares are still likely to change because of currency fluctuations.

Along with offering lower fares on some routes, more European airlines are flying to more out-of-the-way destinations.

For instance, flights to Cologne, Germany, and Birmingham, England, are on the rise, and Stansted Airport, 30 miles northeast of London, is fast becoming an alternative to the crowds at Gatwick and Heathrow.

Slade Travel, based in London, uses what it calls creative pricing to offer low intra-European fares. Like ticket consolidators in this country, Slade buys large quantities of seats on airlines and sells them to consumers at substantial discounts.

In fact, some of the agency's fares are below the lowest published economy excursion tickets.

Often, the tickets are sold on non-European airlines. For example, Slade offers flights from London to Paris on Air-India for about $130, provided the tickets are purchased two weeks in advance.

Charter flights are another way to save money. While most fares within Europe are still government regulated, the charter business is immune from such restrictions and now accounts for about half of the air traffic within Europe.