Page 14-Tuesday, July 29, 1980-The Michigan Daily
A irlines begin
fare war over
N.Y.-London
. 4
I
standby
LONDON (AP) - Two major airlines
launched a trans-Atlantic fare war
yesterday, undercutting each other
repeatedly in a battle that already has
driven the cheapest, one-way London-
New York standby ticket down to $196.
The fare reductions, subject to
government approval, undercut Sir
Freddie Laker's low-cost Skytrain, and
a new round of fare-slashing appeared
likely as the carriers tried to hustle
business ina dwindling market.
"FARES OVER the past five years
have got out of hand," TWA vice-
president Neil Effman told a news con-
ference here. "We want to simplify the
fares structure and bring it down to a
reasonable level."
TWA earlier trimmed its off-peak
standby fare from 92 pounds ($218.04)
to 82.50 pounds ($197) after British Air-
ways announced at the weekend it was
lowering its one-way London-New York
standby from 97 pounds ($229.89) to 84
pounds ($199.08).
But the British flag carrier struck
back yesterday by knocking its price
down further to 82 pounds ($196), the
cheapest fare between the two cities.
BRITISH AIRWAYS' new fares take
effect Sept. 15. The TWA fares, which
affect only off-peak journeys, begin one
month later.
"It's not a game," BA spokeswoman
Diane Kane told The Associated Press.
"We expected other airlines to follow
our first announcement and we said
we'd be prepared to undercut them yet
again.
"We certainly hope to catch a lot of
the standby market." Standby seats
generally are those not taken by reser-
ved-seat passengers, and are offered on
a first-come, first-served basis.
EFFMAN HIT back, pledging TWA is
"not going to be in the marketplace
with higher fares than anyone else."
Both airlines also are cutting fares
between London and other major U.S.
cities and lowering fares on "advance
purchase" tickets.
In New, York, British Airways
spokesman Ron Scobling said the
airline filed Monday for a one-way,
standby fare from New York to London
of $185 effective Sept. 15. TWA
spokesman Ingas McClure said its fare
from New York to London also would be
$185, effective Sept. 15 through next
May 14. New York-London fares differ.
flights
from London-New York prices because
of fluctuations in the exchange rate of
the pound.
CIVIL AVIATION officials have
noted in recent weeks that trans-
Atlantic business is falling off, mainly
because recession in the United States ,
is biting deeper and because of the
dollar's lower value abroad.
Within hours of the two majors' an- a y "
nouncements, the increasingly am-
bitious World Airways, the U.S. carrier
that last month launched a London-
Boston route with onward flights to
Newark, N.J., and Baltimore, Md., an-
nounced new standby and "family
plan" fares.
These include what the airline claims
is the first first-class standby across the
Atlantic of 185 pounds ($438.45).
PAN AMERICAN has begun adver-
tising a $209 one-way standby fare ef-
fective July 30-Sept. 13 and subject to
government approval. '
Meanwhile, Laker Airways, which
pioneered the cut-rate trans-Atlantic
routes three years ago despite fierce
opposition from BA and other major
carriers, shrugged off the lates price- -
slashing.
"That's fine by us," said Lakers
spokeswoman Sue Majors. "We've Loop lit
always said that the more competition, Workmen are dwarfed under a deck section of a pumping platform being lifted
the better." She said the maveric Sir into place 19 miles off the Louisiana-coast near Grand Isle, during construction
Freddie will make no decision "for the of the deepwater port LOOP. The section is 200 feet long, 100 feet wide, and
.time being" on whether to try to match weighs 2000 tons.
BA and TWA.
U.S. roductivt takes
wors drop since April
From UPI and AP
WASHINGTON-The nation suffered its sharpest drop in
productivity since the last recession during the April-June
quarter of this year, the Labor Department reported yester-
day. Output and employment fell. Labor costs soared.
Government and private economists said the latest
figures did not change their assessment of the depth of the
current recession or the prospects for recovery.
BUT THEY SHOWED in stark form how forces of
recession and inflation are operating in the economy at the
same time.
During this year's second quarter, the department said:
" Productivity in the non-farm business sector fell 4.1 per
cent, the largest drop since the 4.7 per cent in the second
quarter of 1974, during the last recession. Productivity,
measuring output per hour of work, fell 1.1 per cent during
the first quarter of this year.
* The output of non-farm businesses fell at an annual rate
of 12.8 per cent, the biggest decline since the department
began keeping these records in1947 and a sign of the steep-
ness of this phase of the current recession.
" The total number of hours worked in non-farm
businesses fell at an annual rate of 9.1 per cent, the sharpest
decline since 1975.
" Employment, which had been growing steadily since
1975, declined at an annual rate of 5.3 per cent.
" Hourly labor compensation-which includes wages,
fringe benefits and employer contributions to Social
Security-increased at an annual rate of 10.8 per cent, a full
percentage point faster than the same period last year.
Productivity, over the long run, is an important measure
of the economy's efficiency and its ability to withstand in-
flation and compete with other nations.
It has been growing more slowly in this country in recent
years and during the last year, has been declining. Repairing
that long-range decline is one reason many economists and
politicians now are calling for a tax cut.
Some economists blame the nation's productivity problem
on a lack of capital being invested to build more efficient fac-
tories. Others question whether the government still is ac-
curately measuring productivity in an economy that has
become increasing service-oriented at the expense of
manufacturing.
On Capitol Hill, Chairman Paul Volcker of the Federal
Reserve Board urged Congress not to enact an across-the-
board tax cut now. Volcker said he could reluctantly accept a
small tax reduction to spur business investment this year,
provided it did not cost too much.