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Low Airfares

Enjoy your low airfares – for now

Steve Everly,  Jan 15, 2009

Consumers are catching a price break as the airline industry rolls out tempting fares to fill empty seats.

Don’t get too used to it: The airline industry, already benefiting from declining fuel costs, is determined to post profits this year by cutting flights and charging higher fares — even in the face of recession.

Last year, the airlines raised fares at a pace that hadn’t been seen for at least 13 years, mainly to cover the surge in fuel costs caused by the then-record price of oil. Those price hikes dwindled as Thanksgiving and the holidays approached, but fares remained higher than a year earlier.

The airlines’ 2009 profit plans to cut flights and ultimately boost fares come as the recession deepens and as business and leisure travelers cinch their budgetary belts to help weather hard times.

While December traffic for Southwest Airlines and Delta Air Lines was up slightly, other major carriers saw some big dips. United Airlines was down 12 percent. American was off 8 percent. And Continental was down 6.7 percent.

Those are the sort of numbers that typically spark a fare war. Although airfare discounts are normal during the seasonally slow month of January, one-way fares are now a cheap as $39.

“The first of the year is a down time,” said Terry Trippler, who operates the travel Web site

But what about the rest of the year? That’s when things will get interesting.

The airlines appear ready to keep cutting flights faster than customers cut travel plans in hopes of supporting fare prices. Meanwhile, they hope to bank big savings on lower fuel costs.

“I think they learned their lesson,” Trippler said. “You can’t sell a ticket for a $10 loss and make it up on volume.”

The numbers of flights and seats are already down sharply from 2007, a trend that picked up speed last year.

By the end of September, the number of domestic flights already was down 5.2 percent from 2007. By the end of the year, as the economy tumbled more steeply, that had nearly doubled to 9.3 percent.

The Air Transport Association says more cuts are coming. United Airlines is standing behind an earlier outlook that its capacity this year could be slashed a further 8 percent to 9 percent. And other airlines are prepared to act if necessary.

American Airlines made sizable reductions in the number of seats available in September and November. A company spokesman said no decision had been made about further reductions this year, but it is monitoring demand.

“No one knows for sure where the bottom of the recession is, both in terms of its timeline and economic impact on travel,” said Tim Smith, a spokesman for American.

Southwest Airlines, which had a 1.7 percent increase in passenger miles in 2008 — that’s the number of miles traveled by paying customers — reduced capacity about 1 percent in December. It now has removed 190 flights, although it hopes to return those as spring travel kicks up in March. But it is wondering about the economic impact on travel.

“It’s a little early to say (how) we may be affected by that,” said Ashley Rogers, a Southwest spokeswoman.

For the moment, even if temporarily, consumers are able to snag some deals.

Unfortunately for her, Elaine O’Brien wasn’t one of them.

On Tuesday, O’Brien was at Kansas City International Airport getting ready to board a flight to Houston with her brother — and was slightly miffed at the difference in fares they were paying. They had purchased their tickets at different times, and her brother was able to snag a fare at half the price of O’Brien’s $440 round-trip ticket.

Enjoy your low airfares – for now
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