New flights may bring lower fares 

A handful of airlines are clamoring to fly out of the gates at San Francisco International Airport this summer, a phenomenon that will almost certainly result in cheaper fares, analysts say.

Burlingame-based Virgin America, Jet Blue and Southwest Airlines, all low-cost carriers, will start service from San Francisco this year. American, Frontier and Alaska Airlines are also planning on expanding service between SFO and major American cities this year.

Virgin America earned a tentative approval from the federal Department of Transportation this week to start flying out of its SFO hub, provided the company meets some additional recommendations to prove that it is a completely American-based company. The tentative approval means that the airline could start flying this summer, spokesman Gareth Edmondson-Jones said.

"I don’t think anything is insurmountable," Edmondson-Jones said of the additional recommendations, which include having CEO Fred Reid step down from the company helm.

It’s hard to say how low the fares will dip, but airlines typically like to follow suit when a competitor raises or lowers airfare, Washington, D.C.-based aviation consultant Pat Murphy said. However, JetBlue, when it announced in January its intention to fly out of SFO, said it would offer introductory one-way fares from San Francisco, Oakland and San Jose to Boston and New York starting at $99.

Edmondson-Jones noted that SFO generally has some of the highest fares in the nation. Even reduced fares in this area are still pretty high, which makes San Francisco an attractive place for airlines, he said.

"This really is an influx of choice," Edmondson-Jones said. "[It] gives people the chance to pick what product they want to be flying on."

On the international front, Irish airline Aer Lingus, which announced last week that it would start nonstop service between San Francisco and Irelandthis year, pending approval of the so-called "Open Skies" agreement. The agreement, approved Thursday by the European Union, opens up long-restricted trans-Atlantic routes to airlines eager to expand their reach.

The pact is scheduled to take effect at the end of March 2008.

Murphy, of consulting firm Gerchick-Murphy, said the lower fares will likely show up first on the domestic front when the three low-cost carriers duke it out in the anticipated airfare war, particularly during the summer when most people are traveling. Three low-cost carriers setting up shop in a matter of several weeks at the same airport is unprecedented, he said.

"It’ll be very interesting to see," he said. "This is quite an event and San Francisco is lucky to have it."

However, any changes in international fares and service may take years to come to fruition even now that the "Open Skies" agreement allows European airlines to expand faster in the U.S. It’s expensive to expand fleets and add personnel, and European airlines will likely want to step back and observe their competitors’ strategies before jumping into the pool, Murphy said.

tramroop@examiner.com

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