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Analysts Call Southwest Fare Reductions Cutthroat

POSTED: 3:18 pm EDT July 9, 2004
UPDATED: 3:35 pm EDT July 9, 2004

A low-cost airline is bucking the trend of summer price hikes.

The travel industry continues its post-Sept. 11, 2001, rebound as popular travel destinations become hot once again -- 12.5 million travelers visited Las Vegas between January and April, a 7.5 percent jump over 2003.

Industry analysts report that air travel is up.

Delta Airlines reported a 17 percent increase in passengers so far this year.

Northwest is up by 13 percent.

Southwest Airlines recently cut some of its fares by 65 percent -- and other airlines have followed suit.

But WRC-TV reporter Tony Dorsey reported from Baltimore-Washington International Airport where some industry analysts wonder whether this is an airfare war or a cutthroat business tactic.

In the world of supply and demand, prices generally go up when demand for a product goes up, Dorsey said.

"We have had a wonderful start to the summer and pre-summer season -- record levels so far this year. Our feeling is we want to say thank you to the customers," Southwest spokesman Craig Vaughn said.

Now through Aug. 5, tickets purchased through the airline's Web site go for between $39 and $99 one way. Travel must occur between Aug. 16 and mid-October.

"I bought my ticket on the Internet and lower fares are always good," air traveler Diane Barras said.

"I will definitely take advantage of it. I'm ready to go to Orlando," air traveler Christina Edwards said.

The fare reductions take effect system-wide. For example, the walkup fare at BWI used to cost $170 one way to Orlando. But if travelers buy online, it costs $49.

Southwest calls the fare reductions a "thank you," but airline industry experts said there's more going on.

"Everybody knows that the industry is going to shake out, and this is going to make it that much tougher for those airlines that are in tough shape, like Delta, United and US Airways, to continue to survive," airline industry analyst Roland Rust said.



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