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.