ATLANTA (AP) – Delta Air Lines Inc.’s strategy to recapture business travelers by overhauling its fare structure is looking like a risky financial bet whose success probably will depend on whether the nation’s third largest carrier can further cut costs.

Within hours of Delta’s announcement Wednesday that it planned to cut its most expensive fares by up to 50 percent and eliminate Saturday stay-over requirements for cheaper tickets, Northwest and US Airways matched the changes in some markets where they compete with Delta. Continental and United reacted similarly, while American Airlines mimicked Delta to a larger degree.

Delta wouldn’t provide specifics about its bookings in the days after the fare change, but company spokesman John Kennedy suggested the results were positive. “We hit record volumes (Wednesday) on delta.com,” he said, adding that there were “huge spikes in various distribution channels” after the announcement.

Still, the changing landscape will mean lower revenues for the major airlines at least for the short-term, perhaps even longer. If that happens, Delta must significantly increase passengers or lower costs – through further labor concessions and increased productivity – to make its plan work, said Kevin Mitchell, chairman of the Business Travel Coalition, which represents large corporations that buy travel in bulk.

“If they did this a year ago, they would have incurred a lot more financial losses because their cost structure was worse than it is today,” Mitchell said. “On the other hand, if they waited a year to get the cost structure the way it needs to be, they’d lose even more market share to the low-cost carriers, which would compound the pricing problem.”

He added, “What they need to do now is to finish the job.”

Delta’s gamble came during an unusually tumultuous week for major airlines, who are pressing workers for wage and benefit cuts as their losses have mounted under the weight of a 40 percent surge in fuel costs over the last year and relentless price competition from Southwest and other carriers with lower cost structures.

Machinists at US Airways Group Inc. face pay cuts of up to 35 percent and the loss of thousands of union jobs after a bankruptcy judge Thursday unilaterally canceled their contract. In a regulatory filing the same day, Continental Airlines Inc. said it needs $500 million in wage and benefit reductions by Feb. 28 or it will face a liquidity crisis. And on Friday, a bankruptcy judge in Chicago threw out a newly crafted contract that called for pilots at UAL Corp.’s United Airlines to accept 15 percent pay cuts, saying he could not approve its requirement that other unions’ pension plans also be terminated.

The cutback in flying by high-paying business travelers and the migration of many of them to low-cost carriers has been one of the more vexing problems for major airlines in recent years.

In 1995, business travelers accounted for an estimated 40 percent of passengers and 60 percent to 65 percent of revenue industrywide, according to surveys of large corporations conducted by the Business Travel Coalition. Today, they account for about 30 percent of passengers and 50 percent of revenue, the group said.

Frequent business traveler Joe Leader of Atlanta said price was the main reason he switched several years ago from Delta to AirTran Airways for trips for the high-tech firm where he works as a marketing director.

“For four years I had to travel between Atlanta and Orlando,” said Leader, 33, who works for Milpitas, Calif.-based LSI Logic Corp., which produces semiconductors. “AirTran was what allowed me to keep my job. They offered a roundtrip fare of around $150 or a last-minute business fare of around $400. The company couldn’t afford to spend $1,200.”

But another frequent business traveler, Steve Freedman, who Leader has tried to persuade to switch to AirTran, said he is sticking with Delta.

“They have a better schedule and more variety of flights,” said Freedman, 35, who often travels to San Francisco and Las Vegas on business as president of a direct mail company. “They have more space for using a laptop. On AirTran, you can barely open your laptop on their planes.”

Delta, which has lost more than $6 billion since early 2001, nearly fell into bankruptcy before gaining $1 billion in pilot concessions in November and securing new financing. The Atlanta-based airline is aiming to cut its costs by $5 billion a year by 2006.

The new fare structure, however, means Delta’s “costs are going to have to go down further,” said John Kasarda, a professor at the University of North Carolina’s business school who specializes in aviation issues. “The issue is when do you cut into the muscle? When do the unions dig in and balk? Nobody knows what the thresholds are. But this was not an option for Delta. This was a necessity.”

Meanwhile, low-cost carriers aren’t professing any worries about Delta’s changes. Orlando, Fla.-based AirTran Holding Inc., which has its hub at the Atlanta airport, and Dallas-based Southwest Airlines Co. said they already offer lower fares than Delta’s new model.

“There’s somewhat of a presumption out there if Delta gets rid of the psychology that their fares are higher, everything will be great,” said Robert L. Fornaro, AirTran’s president and chief operating officer. “I think they ignore the fact that today’s low-fare carriers in many ways have product superiority over them.”

In short, he said AirTran doesn’t plan to do anything different in reaction to Delta’s new fare structure. “We can sit back and ride this stuff out,” Fornaro said.

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