Continental Cuts Vacation Air Fares : Airlines: The 8-day ticket sale comes as carriers are trying to raise prices. It could trigger another fare war.

In a surprise move that may trigger a second summer air fare war, Continental Airlines on Wednesday said it will temporarily cut vacation fares by 10% to 35% on limited routes.

The eight-day sale, which begins today, comes as the airlines--including Continental--attempt to raise prices Friday. The airlines have sought a fare hike in part to recover from the previous summer price war that slashed vacation fares by 50%.

“It’s obviously going to set off Round 2 of the Great Summer Air Fare War of ‘92,� said Thomas Nulty, president of Associated Travel Management, a Santa Ana-based travel agency.

Houston-based Continental, which is operating under the protection of a federal bankruptcy court, said it will cut the price of its regular discount tickets for travel through Sept. 15.

Continental said the discounted seats are available on about half of its 9,000 routes. A Continental spokesman made it clear that the cuts were in select markets and not a “blanket� discount.

In fact, the lower fares will not be available to travelers flying out of Houston or the New York-Newark airports, where Continental controls much of the passenger traffic.

The sale also applies to a limited number of seats, and the supply of discounted seats will be especially tight on some heavily traveled routes and flights--such as those from Los Angeles to New York. The tickets must be purchased seven days in advance of travel and require a round trip and a Saturday night stay.

Whether the Continental fare cut spreads or remains limited depends to a great degree on the response of American Airlines, the nation’s largest carrier and price leader. Earlier this summer, American sent the industry reeling when it cut vacation fares in half after Northwest Airlines allowed adults to travel free when accompanied by a child.

American and other airlines did not immediately respond to Continental’s fare reduction.

The millions of discount seats sold during the half-off sale may restrict the response of the other carriers, Nulty said. Continental, in contrast, restricted the availability of half-price seats, the airline said,

“They sold the vast majority of their inventory,� Nulty said of most major airlines. “If they lower their price to match, they may not have seats to sell to people.�

In a separate development, the Houston Chronicle reported that Maxxam Inc., an investment conglomerate run by financier Charles Hurwitz, planned to make a formal bid for a controlling interest in Continental Airlines.

Hurwitz was expected to make a bid at a creditors committee meeting, the newspaper reported. Maxxam and Continental spokesman declined to comment on the story.