April 30 (Bloomberg) -- Delta Air Lines Inc., American Airlines and other U.S. carriers are slashing round-trip Mexico fares to as little as $260 as the swine flu outbreak erases demand.

Tickets to Mexico City from Dallas/Fort Worth on AMR Corp.’s American sold for $260 yesterday, a drop from about $500 recently, said Tom Parsons, founder of travel Web site BestFares.com. Delta is charging $300 between Atlanta and Cancun, a reduction of at least $100 from a few weeks ago.

The airlines are trying to fill jets after the U.S. urged skipping nonessential trips to the country hardest hit by the virus. Tour operators, cruise lines and Canada’s two largest carriers are among businesses halting Mexico air service and port calls.

“If your flight is booked 85 percent, you probably aren’t offering cheap seats on it at this point,” said George Hamlin of Hamlin Transportation Consulting in Fairfax, Virginia. “If it’s booked 50 percent, you might be.”

Even without the risk of the flu, Mexico’s appeal as a destination is being eroded by steps such as the closing of all 35,000 restaurants in Mexico City to combat the disease, and curbs on corporate travel to the country by companies including General Electric Co. and 3M Co.

Fares to most Mexican cities already had slumped since about mid-April when U.S. spring-break travel ended, part of a seasonal lull until June when schools let out. Alarm over the influenza strain blamed for more than 150 deaths in Mexico only adds to the pressure on prices.

‘You’re Nuts’

“If you’re paying more than $300 right now to anywhere in Mexico, you’re nuts,” said Rick Seaney, chief executive officer of ticket research firm FareCompare.com. “This isn’t the busy season for them anyway. But who wants to go there right now when these governments are basically telling you not to?”

The World Health Organization raised its six-phase pandemic alert to 5 from 4, meaning that a global outbreak of a new virus is near.

While U.S. airlines are keeping their Mexico schedules, Air Canada, the country’s biggest carrier, said yesterday it will suspend flights to Cancun, Cozumel and Puerto Vallarta until June 1. WestJet Airlines Ltd. will halt service to several Mexican cities starting May 4.

Transat A.T. Inc., Canada’s biggest tour operator, scrubbed flights from that country to Mexico through June 1, and Europe’s biggest tour operators, TUI AG and Thomas Cook Group Plc, halted U.K. flights to Cancun.

Biden, Trade Group

U.S. Vice President Joe Biden told NBC’s “Today” show that he’s advising his family to stay off airliners, subways and other confined spaces, a remark that drew a rebuttal from the Air Transport Association trade group in Washington.

The air on commercial jets is “cleaner than that in most public buildings,” CEO James May said today in a statement, calling Biden’s comment “extremely disappointing.” Elizabeth Alexander, a spokeswoman for the vice president, said Biden was referring to the advisory against unnecessary travel to Mexico.

Transportation Secretary Ray LaHood said yesterday that the U.S. government isn’t considering imposing restrictions on travel to Mexico, “because there is no need to consider it.”

Passengers’ Calls

Delta, American, UAL Corp.’s United Airlines, Continental Airlines Inc. and US Airways Group Inc. have all said that they’ve seen more passengers wanting to cancel or postpone trips to Mexico. They wouldn’t give details.

American has had a “slight” rise in calls, though still less than would be typical during a severe storm, Tim Smith, a spokesman, said yesterday.

“International traffic is slow these days -- look at our traffic reports the past few months,” Smith said. Fort Worth, Texas-based American reported a 14 percent plunge in passenger traffic to Latin America for March, deeper than the 11 percent domestic decline.

“Plus, there are probably less last-minute purchasers” because of the recommendation from the U.S. Centers for Disease Control and Prevention to delay nonessential travel, Smith said.

All of the major U.S. airlines are giving passengers a grace period to rebook Mexico trips without penalty, as are Canadian carriers and Mexico’s Consorcio Aeromexico SA, the country’s largest airline, and Grupo Mexicana de Aviacion SA.

JetBlue Airways Corp., the New York-based discount carrier, carried that policy on its Web site, along with an advertisement yesterday for four-night Cancun vacations for as little as $305. That was less expensive than a similar stay in Orlando, Florida.

“Everything is dirt cheap, and it’ll probably get even cheaper,” said Parsons of BestFares.com. “The catch is that Mexico City is pretty much shut down now. What would you do, go and sit on a park bench for a week? Would you even be allowed to do that?”

To contact the reporters on this story: Mary Jane Credeur in Atlanta at mcredeur@bloomberg.net; Mary Schlangenstein in Dallas at maryc.s@bloomberg.net.

Last Updated: April 30, 2009 12:53 EDT