Air- Fare Warfare

After more than a quarter-century of flying in tight formation, the 108 scheduled airlines that make up the International Air Transport Association are girding for their toughest dogfight. Solidarity started crumbling late last month when a dozen carriers began advertising $199 to $220 round-trip youth fares between the U.S. and Europe, lopping as much as $253 off regular peak-season "economy" prices. Now there are reports that the "big four"--Pan Am, TWA, Air Canada and Britain's BOAC--will quit IATA if the cartel does not approve even broader price reductions for people of all ages at its annual meeting this week in Montreal.

The confrontation looks like a scene from the United Nations on one of its wilder days. On one side are the small-nation airlines and their allies--a majority of the membership--which favor retaining lATA's price-fixing power and the relatively high prices that the cartel has set. On the other side are the superpowers, eager for lower fares and resentful of the majority's dominance. Said one big-four negotiator in Montreal: "We're sick and tired of little airlines like Air Afrique telling us what we can charge on routes they don't even fly."

Something for Seniors. While both sides have been flooding IATA with proposals for this week's agenda, young travelers have been scrambling to get youth-fare tickets for fear IATA might vote to eliminate them. But the talk in Montreal as the meeting was about to open was that the youth fares will be retained and probably extended to older people. Among the proposals to be debated:

> A permanent $200 round-trip fare to some major cities in Europe for any passenger who buys his ticket at least three months in advance. This "advance purchase excursion" fare will be pushed by Pan Am, TWA, Air Canada and BOAC. -- A special low fare for travelers aged 65 and over, proposed by Pan Am.

-- A 14-day excursion fare of $243 (New York to London) in the off season and $298 in the peak months, with practically no restrictions on date of purchase, season or passenger age. That is one of Lufthansa's ideas.

> A transatlantic family fare similar to that presently available only on domestic flights. The head of a household would pay $400 ($500 in peak season) and each accompanying family member $133 ($200 in peak season) for a round trip. The move will be suggested by TWA.

-- An end to the IATA rule that all price changes must be ratified unanimously by the membership. The new proposal would require the approval of only 70% of the lines that actually fly the route in question and would seriously weaken lATA's price-fixing power. Though most members oppose such a move now, the threat by the big four to withdraw from IATA may change their position. "We need an industry association," says Air Canada President John Baldwin. "The only question is whether or not it should have the power to set fares."

Surfeit of Seats. Pan Am and TWA figure that lower fares will attract more new customers. Last year those lines flew their planes over the North Atlantic only 54% full. The introduction of Boeing 747 jumbo jets portends an even bigger surfeit of seats. It is still too early to tell whether lower prices will fill them up. Alitalia officers said that its overall bookings the week before last were up 110% from the preceding week and they attributed the increase to the line's youth fare. But Pan Am officials suspected that about half of the youngsters who signed up for the line's youth fare had first cashed in their more expensive Pan Am economy-class and excursion-fare tickets --meaning that the line lost some cash in the bargain.

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