Northwest Airlines is gambling on attracting a larger share of the US business traveller market by creating a new type of discounted advance purchase fare that does not include overnight an Saturday stay requirement.
The new tariff, available only on US and Canadian routes, features a 40% discount off the full economy fare. Northwest says it has developed the new tariff because of the popularity of the 14-day fare (discounted 50% off full fare economy) among business travellers.
Northwest expects that 40% of its business travellers will continue to fly with full-coach tickets, 20% will buy the new fare, and 20% will purchase another type of discounted ticket. It predicts the new fare could boost revenues by $50 million annually.
Neither the airline's competitors nor Wall Street analysts fully agree with Northwest's analysis. Paine Webber's Sam Buttrick says: "The product fills a major gap in the fare structure. But the maths suggests that for each passenger who sells down to the lower fare, at least two passengers will have to trade up."
Source: Airline Business
