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Delta shaves its top fares

Business travelers were always the customers airlines loved to fleece. Need to fly somewhere tomorrow? Want to return home the same day? Get ready to pay through the nose.

On Wednesday, Delta Air Lines launched a major fare restructuring based on a premise other full-service airlines can't or won't acknowledge: Price matters to Joe Road Warrior and Frequent Flier Frances _ or to their bosses, anyway.

The nation's No. 3 carrier cut its top fares as much as 50 percent and eliminated the dreaded Saturday-night stay, a rule airlines impose to differentiate between business and leisure travelers.

No domestic fare will be higher than $499 one-way in coach or $599 in first class, Delta said, and the days of sorting through dozens of different fares for the same trip are over. The airline will offer just six coach and two first-class fares for each flight.

People buying last-minute tickets will get the biggest savings. Leisure travelers who buy tickets weeks ahead likely won't pay less, especially in places like Florida with lots of competition from discount carriers with similar fare rules.

The lowest fares will still require an overnight stay, but it doesn't have to be a Saturday. Delta also is reducing the change fee for a nonrefundable ticket from $100 to $50.

The airline, which has lost $6-billion in the past three years, will initially lose revenue under the plan, executives said. But the lower fares will attract more customers and result in cost savings that will benefit Delta over the long haul, they said.

"Let it be clear, this is not a fare sale," chief executive Gerald Grinstein said in a conference call with investors. "This is a fundamental change to our pricing structure."

At Tampa International Airport, where Delta is a close No. 2 behind Southwest Airlines, the plan might drive down the price of last-minute tickets to long-haul destinations, such as San Francisco, where there isn't discount competition, said airport director Louis Miller.

Delta's strategy is straight out of the low-cost carriers' playbook. Southwest and AirTran Airways suggested Wednesday that Delta was late joining the game.

Merrill Lynch analysts cautioned that an industrywide adoption of Delta's overhauled fare structure could cut combined revenue for the nation's struggling carriers between $2-billion and $3-billion annually.

No airlines had matched the fares on all routes by Wednesday evening. American Airlines, the nation's largest carrier, and No. 2 United Airlines said they were studying Delta's move.

Delta experimented with the plan, called SimpliFares, at its hub in Cincinnati starting in August. Passenger traffic jumped more than 30 percent and customer satisfaction rose, said Harlan Bennett, vice president for yield management. But the restructuring produced slightly less revenue. Delta hopes to close the gap through cost-saving productivity improvements.

The airline expects that offering fewer fare choices will cut call time for reservation agents and increase customer bookings on its Web site from 20 percent to almost 50 percent by 2006.

Information from the Associated Press was used in this report.


A check of fares on Wednesday for one-way travel Monday showed:


Delta $114

United $259

American $559

US Air $397


Delta $70

United $75

Independence $224

US Air $223


Delta $209

AirTran $209

United $272

US Air $272

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