Lower Business Fares Lift United Revenues

Monday, March 3rd 2003, 12:00 am

By: News On 6

CHICAGO (AP) _ United Airlines said Monday it is pulling in an extra $20 million to $25 million per month in revenue because the sharp reduction in business fares it made eight weeks ago is attracting more passengers.

The bankrupt carrier issued a statement saying the lower fares have proven ``good for United's bottom line,'' despite rival airlines' claims that the fare war was taking a toll on the revenues of not only other major carriers but United itself.

``Contrary to some reports in the media, the increase in business passenger volume has more than offset the lower fares,'' said Doug Hacker, executive vice president for strategy at United.

United put the revised pricing structure into effect Jan. 6 on last-minute fares out of Chicago and Denver _ its top two hubs _ giving customers up to 40 percent off unrestricted fares.

Other carriers and some industry analysts criticized the move, which came after a year in which the nine major U.S. airlines lost more than $11 billion combined.

Northwest Airlines said last month it was losing $10 million in monthly revenue as a result of the lowered fares, as did US Airways. Northwest also estimated that United was losing $30 million a month because of it.

A Northwest spokeswoman did not immediately respond to a request for comment on United's estimate.

Minneapolis-based airline travel analyst Terry Trippler said United's statement clearly was a response to Northwest's earlier comment, underscoring the high-stakes competition between the two.

``It's all about Asia,'' said Trippler, of cheapseats.com. ``United and Northwest are neck and neck (on routes) to Asia. It's a highly competitive market and a profitable run.''

If United ultimately is forced to cut back on its Pacific routes or sell them to stay in business, he said, Northwest would be the big benefactor.

``I really think those two airlines are battling for survival, and for growth,'' he said. ``Northwest clearly has the upper hand, but in this industry things can change very quickly.''

United, which filed for Chapter 11 bankruptcy protection on Dec. 9 and lost a record $3.2 billion for the year, must show regular and swift progress toward becoming profitable again or risk losing its interim financing.

Northwest lost $798 million last year.