PRICING FOR PROFIT : WITH CORPORATE TRAVELERS REFUSING TO PAY TOP DOLLAR TO FLY ANYMORE, AIRLINES ARE FINALLY LISTENING

U.S. airlines are starting to issue lower fares for business travelers after two years of watching low-cost airlines grab more market share. It still remains to be seen whether the low fares will stick, and whether they can be profitable in an environment where carriers are declaring bankruptcy and operating at near-bankruptcy. Analysts say the airlines were too aggressive in pricing walkup fares to cover their high costs, with ratios of highest to lowest as much as 10 to 1. JetBlue is a good example of a startup to capitalize on discontented business travelers. In the U.S., low-cost airlines now have 20% of market share, versus 7.5% in 1992. A list of recent business fare initiatives is included. The programs are being more carefully tailored, using computer analysis of city pairs and markets where it would work best. Among those with new lower business offers are American, Delta and United. But some analysts say airlines will continue in the long run to try to exploit the rule of thumb that 10% of the passengers fly 30% of the trips and produce 50% of the revenue.