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Delta discount erasure could irk business
travelersJune 28, 2002 5:54:00 PM ET
By Julie MacIntosh

NEW YORK, June 27 (Reuters) - Delta Air Lines Inc. (DAL) decided this week to stop offering corporate discounts on some of its lower airfares, a move that has industry watchers and some of its corporate clients up in arms.

Business travel traffic is 25 percent lower now than it was two years ago, and a majority of travelers surveyed recently expected a quarter of the cuts in corporate travel to be permanent, according to research from the Business Travel Coalition (BTC).

The depleted roster of corporate road-warriors is the most frequently-cited reason for continued financial distress at nearly all of the nation's air carriers, which have lost billions of dollars since Sept. 11.

But at a time when corporate spending remains incredibly fickle, Delta sent letters this week to some companies that frequently book its flights that said it would trim or completely eliminate discounts for all corporate accounts on its lower airfare classes.

"Of course, we are disappointed in Delta's action -- we had no prior notice of it before receiving a letter on Wednesday," said Carol Sanger, a spokeswoman for Federated Department Stores Inc. (FD), which is based near one of Delta's hubs in Cincinnati.

"The impact on Federated may not be as significant as for other companies," Sanger said. "(H)owever, it will cost us an estimated $150,000 to $200,000 a year. Obviously, this does not make us happy."

A spokeswoman for Atlanta-based Delta declined to comment on the matter.

At a time when continued attempts by the airlines to raise fare prices have failed, Delta's move to effectively increase airfares for business travelers "is the exact opposite of what is required to encourage corporations and individual business travelers to return to commercial aviation," the BTC said.

The changes could increase travel costs at the airlines' corporate customers anywhere from 15 percent to 30 percent, the business travel group estimated.

AirTran Holdings (AAI) unit AirTran Airways, which runs the second-biggest operation at Delta's main hub in Atlanta, could stand to benefit if business travelers looking for discounts shy away from Delta.

"What we've heard from our sales force is that they've seen Delta cut the discount off of the lower fares and not the higher fares," Airtran spokesman Tad Hutcheson said.

"We do compete, and it'll be interesting to see what happens," Hutcheson said.

In November 2001, Northwest Airlines (NWAC) also enacted a policy that eliminated corporate discounts on lower fares. REUTERS

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