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Friday, August 20, 2004

Delta fare plan now seems fair


Editorial

Delta Air Lines' decision to reduce fares out of Cincinnati/Northern Kentucky International Airport is good news for the region, but the key will be whether the airline is committed to sustaining the reasonable rates.

The plan, called SimpliFares, cuts some fares by as much as 60 percent and promises that no one-way flight from Greater Cincinnati to any Delta or Comair destination in the continental United States will cost more than $499 for coach or $599 for first class. No round trips, before taxes, will be more than $1,000. That's great news for the approximately 2,500 people from this area who now opt to take cheaper flights out of Dayton, Lexington, Louisville, Columbus or Indianapolis every day. And it is an admission by Delta that its overpriced local fare structure was, in the words of Paul Matsen, senior vice president and chief marketing officer, "an impediment" to good customer relations.

It also was an impediment to the company's bottom line, a great concern these days as the Atlanta-based airline struggles with billions of dollars in losses. In a meeting with the Enquirer's editorial board Thursday, Matsen said the company realizes it has to "overcome the skepticism" of lost customers and not remain "stuck in the traditional paradigm" of the airline industry's pricing habits.

That paradigm means that when a company has virtual monopoly into and out of an airport, as Delta does here, it can raise the fares far higher than it would be able to do in a more competitive setting. Our airport is the second-largest hub in the Delta system, but it is a two-edged sword. On the one hand, the hub offers lots of flights to lots of places. But with Delta handling 90 percent of the airport's departures, competitive pricing disappeared.

Martens described SimpliFares as a "fundamental change" in Delta's approach to its Greater Cincinnati customers, one that was urged by local chambers of commerce, the Convention and Visitors Bureau and many of its larger business customers.

The convenience and efficiency of the airport has been an economic engine for the region, particularly for booming Boone County. Delta is one of the region's largest employers, with 7,500 workers in Greater Cincinnati. Business customers are willing to pay premiums on their fares for the convenience of the hub, but only up to a point, said Harlan Bennett, the company's vice president for pricing and revenue.

The company now realizes what many of its customers have long known - that some of the "premiums" felt a lot like gouging, and that saving hundreds of dollars on a flight might well be worth driving an extra hour or two to another airport.

Delta will still charge some premiums for flights out of the hub, and a conscientious bargain hunter still will be able to find cheaper fares on discount airlines out of neighboring cities. But the good news is that Delta's new price plan means that flights out of Greater Cincinnati will now be competitive as well as convenient.



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Jim Borgman
Jim Borgman
Jim Borgman is The Cincinnati Enquirer's Pulitzer Prize winning editorial cartoonist.
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