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AIRLINES ADD TO WOES BY PRICING BUSINESS TRAVELERS OUT OF THE MARKET, EXPERT TELLS CONGRESS

 /ADVANCE/ WASHINGTON, Feb. 18 /PRNewswire/ -- The airline industry is pricing its best customers out of the market through unrealistic hikes in business fares to compensate for losses on discount fares, a travel expert told Congress today.
 John Hintz, president of the National Business Travel Association, said companies are cutting back on travel plans because airlines have raised business fares by 15 to 25 percent in the last 90 days alone. Federal sales taxes compound the problem by adding another 10 percent to these higher ticket prices, he said.
 "The average business traveler now pays up to four times more than a non-business traveler for the same trip," Hintz told the House Aviation Subcommittee during its second day of hearings on the crisis in the airline industry.
 In his own company, where he manages a $100 million travel budget, Hintz said a 25 percent fare increase forces cutbacks in travel of 25 percent in order to live within the budget. Many other companies, universities and other institutions among the association's more than 2,000 members are taking similar steps, he said, adding to the airlines' woes.
 The core problem, he said, is that airlines are increasing the cost of business travel to unrealistic levels to make up for losses on discounted fares. He urged airlines to be more realistic in their pricing at both ends of the spectrum in order to increase the number of full-fare passengers.
 Specifically, he suggested that Congress should consider setting minimum rates for all major air routes to enable airlines to at least break even on discounted fares. This would ease pressure on business fares and thereby stimulate more business travel, making the airlines more profitable.
 At the same time, Hintz asked Congress to roll back the 1990 increase in the federal sales tax on air tickets. This would not necessarily reduce federal revenues, he said, because it would lead to an increase of 6.5 million taxpaying passengers. It would also add $300 million to airline revenues and create 7,500 more jobs in the airline industry.
 An increase in business travel through more realistic pricing would have a multiplier effect throughout the economy, Hintz said. It would provide an important stimulus to the nation's economic growth at no cost to the taxpayer.
 He said his association would propose these and other solutions to the new commission on the financial crisis in the nation's airline industry.
 -0- 2/18/93/0001
 /CONTACT: Carol Anderson for the National Business Travel Association, 202-466-8320/


CO: National Business Travel Association ST: District of Columbia IN: AIR SU:

KD -- DC026 -- 7463 02/17/93 15:41 EST
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Date:Feb 17, 1993
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