Delta cuts fares in survival plan

Delta Air Lines is cutting domestic fares by as much as 50% as part of a plan to ensure its financial survival.

Other US carriers, including United, have sought bankruptcy protection, amid high fuel costs and competition from discount carriers. Delta is restructuring in a bid to fight off insolvency. This latest move to boost business has prompted speculation other firms will be forced to match their fares, hurting revenues in the sector. Delta's new SimpliFares were trialled from August last year on tickets from Cincinnati, its second-largest hub.

The airline says no one-way economy fare will now be priced higher than $499 (£264), and no first-class fare will be priced higher than $599. It is also eliminating a Saturday-night stay requirement on discount fares and will give further reductions to customers opting for non-refundable tickets, booking in advance and online. Delta, which lost $646m in the three months to September, was forced to cut 6,900 jobs worldwide as part of its aim to slash $5bn from its costs. In October, it reached a crucial agreement with pilots on pay and conditions and it has also issued new shares to staff in return for wage cuts. Airline shares closed lower on the announcement, with Delta, Continental and American Airlines all falling by more than 7%. "We believe the whole airline industry will now have to move in this direction; this will likely hurt revenue in the short run but could be beneficial in the long run," said analyst Ray Neidl at Calyon Securities.
