United Airlines aims to double its passenger traffic in the Pacific in five years but doesn`t plan to cut prices to fill its planes, United Chairman Richard Ferris said Monday.
United, which took over Pan American World Airways` trans-Pacific routes Feb. 11, already has begun efforts here to expand one of its most powerful marketing tools. United intends to sell its computer reservations system, already widely used in the United States, to travel agents throughout the Pacific, Ferris said.
In addition, United is discussing a possible arrangement with various international carriers for extending use of the electronic system in Europe.
Ferris and other United officials met with reporters here, kicking off a weeklong visit to the Orient to greet former Pan Am employees who are working for United and inspect airport and other facilities acquired by United as part of the $750 million deal.
Later, Ferris was scheduled to meet with various government and aviation officials here and in Osaka, Seoul, Taipei and Hong Kong.
In regard to speculation that United`s ambitious growth plan will fuel price wars in the increasingly competitive Pacific corridors, Ferris said,
”We have no intention of lowering fares.” However, he added, ”we will not be undersold,” and said United would offer as many inducements as possible to encourage travel to the United States.
Competition is as intense in the Pacific as it is in the United States, he said.
International fares here are government regulated. But competition, in the form of increasingly generous commissions to travel agents, has been keen in the Pacific.
To win business, airlines have doled out commissions totaling as much as 40 percent of ticket prices to agents who in turn sell cheap, black-market tickets to travelers. That compares with a standard 10 percent commission in the United States. Also, United and other international carriers have been selling deeply discounted fares on their U.S. routes to travelers from overseas.
United operates 74 weekly trans-Pacific departures, up from 14 before the route purchase. The expansion followed touchy government negotiations for Pan Am`s overseas landing rights which overcame opposition by the Japanese, who fear their carriers will be at a competitive disadvantage to the much bigger United.
Despite the fact that Japanese objections delayed United`s Pacific start- up by several weeks, Ferris said he was pleased with the actions of both governments.
”It went as smoothly as it could have, and much faster than I dreamed it would,” he said.
United`s new Pacific operation hit a few snags, however, in the last week. The airline replaced six engines on jumbo jets just purchased from Pan Am.
”That`s a lot of engines,” Ferris said.
The engines needed considerable repairs, United officals said. One failed on the first day of United`s service, causing a lengthy flight delay and interrupting an inaugural celebration by the airline in San Francisco.
United continues to pursue new service in Japan and elsewhere in the Pacific. It has applied for permission to fly between Tokyo and Washington Dulles International Airport later this year. In addition to doubling its passenger traffic, the Chicago-based airline plans to increase its trans-Pacific capacity by 50 percent in five years, Ferris said.
