Southwest and American Duke It out on Prices

It appears that American Airlines isn't going to give any ground to Southwest Airlines when it comes to airfares in North Texas.

When averaged, American's fares for tickets bought a week in advance are cheaper than Southwest's to the 25 new cities that Southwest serves in one-stop service from Dallas Love Field.

However, Southwest is cheaper in 17 of the 25 markets, and the Dallas-based discounter has a price advantage for tickets bought for travel the next day.

Its biggest margin is for one-way trips bought at the last minute -- on average, Southwest charged half the price of American.

"American's putting up a good fight," said Tom Parsons, owner of BestFares.com. "It's a dog fight, and consumers are still going to be the winner."

The two carriers said Tuesday that they expect a never-ending battle for the hearts and pocketbooks of North Texas travelers, with much lower fares than what had been available before Congress permitted carriers at Love Field to sell long-distance tickets.

"We are trying to be very competitive," said American's chief fare-setter, Scott Nason. "We're not surrendering anything."

"We're having a very positive response, booking wise, so we're very excited about that," said Kevin Michalenko, Southwest's director of pricing.

"People are very receptive to our low-fare operation. It's not only on our leisure fares, but our business fares as well."

Most of the attention has been on the cheapest excursion fares, with Southwest offering $99 one-way fares on travel booked at least 14 days in advance and American responding with similar fares for its flights from Dallas/Fort Worth International Airport.

But the lower prices have cascaded through the fare structure on flights to and from the 25 markets that Southwest can serve as long as it first makes a stop in Texas or eight other states spelled out by the Wright amendment, a 1979 federal law.

Steve Cosgrove, owner of Dynamic Travel in Southlake, said fares are much lower than before for many trips booked less than two weeks before travel. Although those fares are generally aimed at business travelers, "it's good for leisure travelers," Mr. Cosgrove said.

Many leisure trips are booked less than two weeks from the travel date, he said, and the lower fares have many people considering flying to cities for long weekends.

"People can realistically look at spending a long weekend in Indianapolis, Tampa or Salt Lake," Mr. Cosgrove said.

The Dallas Morning News researched fares available through the carriers' Internet booking sites, AA.com and Southwest.com, to see what was available to the new cities. Among the findings:

--For round trips booked Monday for travel Oct. 31, American's average fare to the 25 cities was $253.24, 2 percent less than Southwest's average of $258.14. However, Southwest was cheaper in most of the markets.

--For round trips booked Monday for travel the next day, Southwest was 8 percent cheaper, with a round-trip average of $550.81 compared with $593.64 for American. American was cheaper in five of the 25 markets.

--For one-way trips booked Monday, for travel the next day, Southwest's fares were about half the price of American's, $259.36 vs. $505.64.

--In markets without significant low-fare competition, American still charges a hefty price: $1,418.60 round trip to New York and Boston or $1,408 to Charlotte, N.C., whether bought a day or a week in advance.

In a few cases, American had the cheaper fare with fees and taxes, even though Southwest's base fare was lower.

The reason: Passengers must pay a $3.30 excise tax on each flight segment and passenger facility charges for each flight departure at many airports.

Since Southwest's through-ticketed service has at least two more flight segments than American's nonstop service, the fees and taxes are higher.

For example, on a ticket bought a day in advance, American charges $428 for a round trip to Chicago, compared to Southwest's $418. But when fees and taxes are added, American's fare of $448.60 is less than Southwest's $453.20 fare. The two carriers charge an identical $536 fare to Fort Lauderdale, Fla., but American's net price is $556.60, 1.3 percent less than Southwest's $563.70.

Mr. Parsons said travelers looking for the cheapest fares may already be out of luck for the high-demand days around Thanksgiving, Christmas and New Year's. However, there seems to be good availability on nonpeak days, he said.

"When it comes to holiday trips, don't expect any mercy from American Airlines or Southwest," he said.

He advised people wanting to travel for spring break to wait until Southwest releases its next schedule. Now it is selling tickets only through March 9, and carriers aren't offering the lowest fares until Southwest does, he said.

For example, American is selling tickets from D/FW to Seattle for $218 for departure on March 2 and a return on March 9, the last date for which Southwest is selling tickets.

But the same trip booked for travel March 10 with a March 17 return flight is selling for $298.

"It would be wise to wait with all your eyes and ears open," Mr. Parsons said.

Mr. Nason, American's vice president of revenue management, said American thinks customers will pay a little more for a nonstop flight on American rather than a one-stop service or connecting service on Southwest.

For example, American's nonstop service to Los Angeles has an average flight time of 3 hours and 13 minutes, compared with 5 hours and 16 minutes for Southwest.

"Each passenger will have their different valuation -- which airport is more convenient, which airline they like better, how important the nonstop vs. the one-stop is for them," he said. "We think they'll like our value proposition."

Southwest's Mr. Michalenko said American will "do what they have to from a competitive standpoint."

"Southwest by nature is a low-cost, low-fare carrier," Mr. Michalenko said. "That's what we do every day. We don't have to adjust to another carrier, which is what American has to do because they're by nature a higher-cost, higher-fare carrier."



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