After years of layering ticket prices with fees for food, phone service and luggage, airlines now are scrambling to win customers back the one way they know how: giving the seats away.
Problem is that at any price, fewer people can justify taking a trip and the expenses that go with it. Business travel, the industry’s cash cow, has dropped dramatically as corporations reduce expenses. This leaves leisure travelers, who typically spend half or less on fares than do their corporate counterparts. Translation: The airlines need two-and-a-half to three leisure travelers for every lost business fare, said Rick Seaney, CEO of FareCompare.com.
“It’s going to be a consumer bonanza, except that the consumers may not come to the party,” he said. “This is going to be one of the strangest years in history.”
Seaney estimates airlines charged 30 percent to 50 percent less on sale-priced fares in March 2009, compared with March 2008. For non-sale fares, he figures the prices declined on average by 10 percent to 15 percent. Likewise, he counted 46 advertised sales in the first two-and-a-half months of this year, compared with 27 in the same period in 2008.
Among the examples is a blowout by Jet Blue, which on April 2 offered New York-to-San Francisco fares for $14 each way – less than the cost of checking a bag with Delta Air Lines. The offer was available for a week, but the tickets sold out by the afternoon of the launch date. And American Airlines is offering, through May, triple points on coast-to-coast flights.
Indeed, some of the steepest cuts and most lucrative bargains are offered on coast-to-coast travel, where the competition is most rabid, said Seth Kaplan, managing partner of Airline Weekly, an industry trade in Fort Lauderdale, Fla.
That doesn’t help us Midwesterners, who have far fewer direct options to California, let alone panicked fare wars. (A check on Delta’s Web site for June 6 flights to San Francisco showed two direct fares from the Cincinnati/Northern Kentucky International Airport; from JFK in New York, three were available, some of them for $20 less more per ticket.)
Still, Delta did weigh in with cuts at its Cincinnati hub, reducing all of its domestic fares by as much as 60 percent. But that is a reduction on fares that are consistently among the highest in the nation. From Cincinnati, for example, a traveler can now fly to San Francisco on June 6 for $279. And to Miami, Fla., for $240.
“Cincinnati is not where you’re going to get the very best deals,” Kaplan said. “Certainly fares have come down. They’ve come down everywhere, and they have come down there as well.”
Local fare wars highly unlikely
The degree to which fares decline is simply a matter of competition. Airlines at surrounding airports likely will feel compelled to lower their fares relative only to those at CVG, for instance. And that means they probably won’t lower fares much, said Bob Harrell, president of Harrell Associates in Manhattan, which tracks air fares.
“It’s not likely that if Delta is trying to match the Dayton fares that Dayton is going to lower their fares further,” he said. “(But) it depends on what their loads are.”
Likewise, not all parts of the world are a deal right now. Fares to Asia have come down a little but are still fairly expensive.
The best locales? For foreign travel, it is Europe, hands down, Seaney said. But South America, among the most expensive places to fly a year ago, also is a bargain, with fares to Rio de Janeiro from New York at $600.
Also keep in mind that most fare reductions are only in effect through June and have yet to bleed into July. Airlines are hoping there is a bottom to the decline and that it is reached by July, so they can get a little juice out of the normally lucrative summer season. Seaney recommends waiting two-and-a-half months before buying a foreign fare; that is typically when airlines take stock of what is filling up and how they should price.
Also remember, when considering those fares, that advertised prices might not include taxes and fees. For domestic fares, the rule of thumb is $21 in government fees.
Then there are the airline-imposed charges, which can add $50 or more to a ticket. Some such fees didn’t stick – U.S. Airways’ attempt to charge $1 for coffee and $2 soda, for instance. But once these charges are adopted, don’t expect them to go away. Fees for checked bags and a change in scheduling – the two biggest – could add up to $1 billion in revenue for a major carrier, Seaney estimates.
Of course, the airlines have to first persuade us to pack our bags, and that is proving a tall order.
”Passengers don’t have fear of flying,” Seaney said. “They have fear of spending money.”