Downturn Puts Air Travelers on Cloud Nine
Saturday, March 14, 2009
An airfare war has broken out in recent weeks -- a boon for anyone with money to travel.
Airlines have rushed out coast-to-coast travel deals for as little as $99 each way for the spring and summer as the economic downturn has taken hold. Continental Airlines and United Airlines, fighting it out on routes between Washington and Los Angeles, have priced round-trip tickets under $200. Airlines in recent weeks have cut ticket prices as much as 50 percent from a year ago, travel analysts say.
"If you are paying over $300 for an airline ticket right now, you are probably paying way too much," said Rick Seaney, chief executive of FareCompare.com. "We'll never see these prices again outside of a recession."
The fare war comes as American companies scale back business travel and skittish consumers put off vacation plans, putting new pressure on airlines that only a year ago were fighting high fuel costs.
In addition to lower fares for domestic flights, international travel has suddenly become cheaper, with many round-trip tickets to Europe priced at less than $500 for travel in April and May.
Yet some travel analysts are skeptical that travelers will buy, even at those prices.
"I think people's interest in buying those fares are heading downward," said George Hobica, creator of AirfareWatchdog.com. "With 600,000 or 700,000 people losing their jobs every month, they are asking themselves, 'Can I really afford this?' "
Airlines began the year thinking the passenger market wouldn't be so bad. Many had spent 2008 cutting less profitable routes and scaling back the number of flights, giving them more room to boost prices on the seats that remained.
Operationally, flight cutbacks mean fewer planes stacking up at airports, alleviating congestion. The government has reported that airline on-time rates are at their best level in years, even at busy New York airports.
Though airlines have been aided by lower fuel prices and the recent strengthening of the U.S. dollar, the cratering economy has dashed hopes of fat profits. Globally, airlines are projected to lose $2.5 billion in 2009, according to the International Air Transport Association.
Airlines began offering discounted fares in October after Wall Street banks began to buckle, grounding bankers and other financial executives who paid top dollar for transatlantic tickets. The steady stream of price cuts continued over the winter holidays. Now the discounting is spreading into the spring and summer -- historically the strongest profit period for airlines as travelers take vacations.
"This is a major war," said Tom Parsons, chief executive of BestFares.com, a discount travel Web site. "We never expected airfares like this in June or July of last year. We would have expected air fares double this."
Southwest Airlines, which has a hub at Baltimore-Washington International Marshall Airport, has cut fares to $78 round trip (with $20 security fee) for nonstop travel from Baltimore to Albany and Buffalo, N.Y.; Providence, R.I.; Hartford, Conn.; Manchester, N.H.; Cleveland; Norfolk; and Raleigh, N.C.
Fares to Europe have also fallen sharply. A year ago, a flight from Washington to Paris would have cost about $815 with taxes and fees, according to a price check by BestFares.com. Today, a round-trip ticket on United for travel in May costs about $570. Prices on flights to London are also falling. United and British Airways are promoting fares of $510 for travel in May.
Hobica warns that summer nonstop international flights from Washington airports still remain pricey compared with other international gateways such as New York, Chicago and Los Angeles. But he said prices are generally $200 lower than a year ago.
Americans traveling abroad are getting a big lift from the rising buying power of the dollar. The dollar's value has grown 27 percent against the euro and 40 percent against the British pound from last summer.
For the best deals, analysts say travelers should first look for midweek flights. And even with the sales, they should be aware that the best deals probably won't be available for Memorial Day weekend or the Fourth of July. They are cautioning that travelers should pack light because most airlines charge baggage fees that they didn't have a year ago.
And travelers with job worries need not stay home. The airlines are trying to be helpful. JetBlue, whose passenger traffic fell 8.3 percent last month, is offering refunds for ticketholders who are terminated from full-time jobs. Sebastian White, a JetBlue spokesman, said the airline won't report how many people have asked for their money back. But he notes that the deal "came at just the right time" for many customers.