Oct 13 An escalating fare war over the Atlantic
is forcing big airlines to consider chopping prices, redesigning
cabins and adding restrictions to win back budget-conscious
vacationers drawn to upstart, low-fare rivals.
Delta Air Lines Inc is reviewing cabin layouts,
fares and the rules that come with them for international
flights, its President Glen Hauenstein said on a call with media
"The exercise we're going through is to see what do people
really want to buy and what are they paying for it," Hauenstein
said. "It includes all kinds of fare products; it includes
cabins we don't have today."
The airline's marketing partner, Air France KLM SA
, said last month that it was looking at every option
to fend off low-cost entrants.
And U.S. rivals American Airlines Group Inc and
United Continental Holdings Inc plan to roll out
stripped-down fares for domestic travel, though a spokesman for
American declined to comment on whether this would be extended
to Europe, and United representatives did not immediately
The moves by the big carriers follow a summer in which
budget long-haul airlines, notably Norwegian Air Shuttle ASA
, shook up the trans-Atlantic travel market by offering
ticket prices as little as half what rivals charge.
Norwegian has said it can do this profitably because its
labor costs are low and it flies some of the most fuel-efficient
Low-cost Icelandic carrier Wow Air also has taken market
share from legacy airlines.
Those advantages will take time for legacy carriers to
match, but Norwegian also has more economy seats on planes and
charges for meals, seat selection and other amenities. Those
tactics are easier for Delta and others to replicate.
The unbundling of amenities that come with a ticket is a
move Delta deployed to compete with budget upstart Spirit
Airlines Inc at home. In July, Delta said it plans to
have the so-called "basic economy" product in all international
markets in 2018, and a spokeswoman said Thursday that it already
is on offer for some international destinations such as London
Delta, the No.2 airline globally by passenger traffic, said
Thursday that trans-Atlantic revenue fell 8 percent in the third
quarter from a year ago. It attributed this in part to flights
on low-cost airlines and luxury Gulf carriers like Emirates
According to air travel intelligence company OAG, one-way
flights on Norwegian across the Atlantic grew 44 percent to
2,916 this year, after increasing 34 percent in 2015. This
includes new service between New York and Paris, a hub for Air
Norwegian's schedule is dwarfed by Delta's more than 22,000
trans-Atlantic flights, but the added service is undermining
efforts by Delta and other legacy carriers to shrink
trans-Atlantic capacity and firm up prices that have been
The data reflects schedules as of Sept. 9.
The biggest U.S. airlines and unions have turned to
regulators to ease the pressure.
For more than two years, the U.S. Transportation Department
has yet to finalize approval of flights that Norwegian has
petitioned to start under an Irish subsidiary, in part because
many in the U.S. industry say it would undermine wages and
working standards. Norwegian has disputed the claims. The
European Commission is now seeking arbitration because of the
Norwegian's Chief Commercial Officer Thomas Ramdahl has
estimated that about 20 percent of the airline's long-haul
passengers are snatched from rivals. The majority are choosing
their European destinations in the first place because of
Norwegian's low fares, he told Reuters in an interview last
(Reporting by Jeffrey Dastin in New York; Additional Reporting
by Victoria Bryan in Berlin; Editing by Lisa Shumaker)