Flying in a maze of new fares, price wars, restrictions

Until this year, the people who worked for American Appraisal Company often traveled first class when they flew from one city to another, helping corporate clients put valuations on their plants and equipment. Not any more.

''All of our appraisers have to fly coach now,'' says American Appraisal vice-president Michael Kelly. They also have to book flights in advance whenever possible, stay in one city long enough to obtain a ''super saver'' fare when feasible, and try to find the bargains among the commuter, regional, and major airlines. It can often make getting ready to go somewhere a long process.

In other words, big companies like American Appraisal have to go through all the confusion and trouble trying to find the cheapest air fares like anyone else.

Chances are that cost-conscious businessmen and ordinary customers will have to go through that trouble for quite a while longer.

The US airline industry, buffeted by the continuing problem of excess seating capacity, depressed profits, and the task of periodically trying to fit new carriers into the marketplace, is going to have to keep up the often confusing array of new fares, fare wars, and restrictions - at least for a while.

''Actually, I think the (confusing fare structure) is going to get worse,'' said Ida Roberts, spokeswoman for Eastern Air Lines. ''When you have empty seats in the marketplace, you have to go after every little piece of the market you can.''

While discounts will continue, overall fares are expected to increase this fall, says Barry Gordon, vice-president and portfolio manager for the National Aviation and Technology Corporation, a mutual fund specializing in aviation stocks.

''The major carriers will be putting in increases of about 5 percent,'' he says. ''But there will still be some fare wars.''

''Fares will continue to go up again, down again, and up again,'' said David Campbell, airline analyst with Wheat, First Securities Inc., a brokerage firm. ''There have been air fare wars every year for the last 10 years. There's nothing the airlines can do to stop them. You've got to bring in passengers.''

For the airlines, this marketing battle is troublesome and financially dangerous. By some estimates, the US airlines are losing about $1 billion a year , as a result of many planes flying half empty, high labor costs, and the continuing effects of last year's air traffic controllers' strike.

To help reverse this drain, airlines have not only lowered fares, they have offered trading stamps, traded children's tickets for cereal box tops, and moved in and out of various special promotions.

Some are also trying to return or increase service to many of the smaller and medium-size cities that lost it soon after deregulation went into effect. Piedmont Airlines, for instance, has established a new ''hub'' in Dayton, Ohio, to serve cities like Fort Wayne, Ind.; Grand Rapids and Lansing, Mich.; Toledo and Akron, Ohio, with connections to Boston, Washington, Miami, and Dallas.

However, the effort to continue discounts and add service has not helped the carriers very much.

''This industry is struggling,'' admits American Airlines spokesman Al Becker. ''It's hard to do financing for equipment. Wall Street continues to be concerned about the financial condition of the airlines. . . . So everybody is looking for that little competitive edge that will make them more attractive to the consumer.''

But for the traveling public and the travel agents, these ''little competitive edges'' can be exasperating.

''The airlines call it marketing. I call it madness,'' says Bernard Garber, president of Garber Travel of Brookline, Mass., the largest travel agency in New England. ''It's absolute chaos. There's always something happening. Sometimes the changes come by the hour.''

The most common reason for a dramatic fare reduction on a particular route is a new carrier, either an entirely new company or an existing company trying to enter a new market. In these cases, executives of the established carrier can get up one morning and find that a competing airline is charging half, or less, than they do. Or, if they had a low fare with a few restrictions - a seven-day advance purchase requirement, for instance, or a nighttime-only rule - they may find a competitor offering the same fare with no restrictions.

This means the airline passenger must be much more aggressive in finding the cheapest fare and the fewest restrictions. Once, they could simply call a travel agent or airline and tell them where and when they wanted to go, and be fairly sure they would get the best fare; there just weren't that many to choose from.

On some routes today, however, there can be more than 100 different fare-and-restriction combinations, Mr. Garber says. Sometimes, even the travel agents can't keep up.

''Customers come in and tell us about a fare they've seen in a newspaper or heard on the radio,'' relates Nancy Strong, owner of Strong Travel in Dallas. ''

The fare is there, we can sell it, but we don't know about it yet.''The most common complaint travel agents hear is over the fact that it costs more, sometimes twice as much, to fly from a city on the East or West coast to the interior of the United States than it does to fly coast-to-coast.

The reasons for this dichotomy help explain much of the confusion behind the baffling and complex fare systems.

Before deregulation, fares were largely based on a combination of distance and demand. If an airline wanted to change a fare, add a route, or drop one, it had to file an application with the Civil Aeronautics Board. A public announcement of the filing was made, which gave people warning of a change. Then , the CAB took a couple of months to approve it.

Those days are gone. Now airlines can change fares and routes at will and fares are not based on distance, but on demand, which increases competition for a route. If more people want to fly from Buffalo to Boston than from Buffalo to Albany, the Buffalo-Boston fare is cheaper, even though the flight is 100 miles longer.

Finding the cheapest fare in this environment means customers have to work harder than before:

* Start looking early. Some airlines have advance-purchase discounts that start up to two weeks ahead of departure.

* If you can change your departure or arrival plans by a day or two, this could increase the number of available fares.

* Try to see if a new competitor has started service on your route, or if a new service can make it a cheap one-stop trip.

* Expect to change planes - even airlines - in mid-route to cut your fare. You may find it cheaper to fly from a small city to a big one to finally get to another small city, rather than trying to take a direct flight.

* If you use a travel agent, you may want to use more than one to make sure they are finding the best deal. This is not to say one agent is better than another, though this may be the case; fares change so frequently, one agent may hear about bargain before the other does.

* If you find the lowest fare, buy the ticket immediately. ''Buy that ticket now and keep checking until you leave,'' advises Marjorie Claverie, a travel agent with Trips & Co. of Cambridge, Mass. ''Once you've paid for it, the price can't be increased. But we can always rewrite it at the lower fare.''

* A travel agent can increase (but not always guarantee) a customer's chances of being transferred to another airline, should the planned carrier suddenly go out of business, as happened earlier this year with Braniff Airways. Most tickets bought through agents will be honored by other carriers.

There are attempts being made to bring some order out of the air fare confusion. Some airlines are devising fares that reflect some resolve to hold the line against ever-lowering discounts and the perennial problem of ''no shows ,'' people who buy tickets, don't show up for the flight and get a full or partial refund.

The most aggressive strategy against this was introduced in January by Air Florida. Depending on distance, customers can purchase a ticket at a 20 to 50 percent discount. After buying their ticket, they may, if they wish, give it to a friend or relative. What they cannot do is get a refund.

''We started (the no-refund practice) on our Northeast-to-Florida routes,'' said Air Florida spokeswoman Robin Cohn. ''We've been very pleased with it, so now we're doing it on all our routes.'' So far, the no-refund tactic has been matched by Pan American, Eastern, and Delta on routes where those carriers compete with Air Florida.

Another carrier, Pacific Southwest Airlines, decided to help end the confusion by returning, on Aug. 1, to a one-fare system. While fares vary for distance, a spokesman said, there is one PSA fare from Los Angeles to San Franciso, for example, and no advance purchase and no minimum-stay requirements. PSA used this policy when the airline started more than 30 years ago, the spokesman said, but it was abandoned in the competitive wars of the late 1970s. Since being reintroduced, planes are noticeably fuller, he observed.

Still, airline experts say, the smorgasbord of fares will be a fact of traveling life for the foreseeable future.

''There are just more seats available than this industry would like to have in many markets,'' said Daniel Kaplan, director of the CAB's office of economic analysis. ''As long as that is the case, fares will continue to be cut in these markets.''