Fair prices--or fare wars? When American Airlines unveiled its four-tier fare structure in early April, it bet that simpler and lower fares would boost revenues by attracting more travelers. But the move may have backfired. Trans World Airlines and USAir retaliated with steep price cuts, and American was forced to lower fares again to remain competitive.
Now, the industry appears headed for an all-out price war. It's hurting already. Citing the implications of increased competition, among other factors, credit-rating agency Standard & Poor's on Apr. 21 put seven carriers, including American parent AMR, on its CreditWatch.