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Fuel cost lets airlines cut prices, still profit

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    A United Airlines passenger airplane passes over Whittier
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ABOARD AMERICAN AIRLINES FLIGHT 1223 » Airline fare wars are making a comeback.

Don’t expect widespread sales or cheap flights home for Thanksgiving. But a number of cities are seeing ridiculously low prices at off-peak hours — prices the industry has spent the years trying to eliminate.

Fliers have been able to fly from Chicago to Boston for $80 round trip, from San Francisco to Las Vegas for $67 round trip, and from New York to Los Angeles, with a connection, for $150 round trip.

"This is the big break consumers have been waiting for in response to lower fuel prices," says Seth Kaplan, managing partner of industry newsletter Airline Weekly.

The price of oil is at the lowest level in 6-1/2 years, and the industry is saving billions of dollars on fuel, giving airlines leeway to cut fares but still post healthy profits. Airlines have also added larger, more efficient planes to their fleets while packing more seats into existing jets. So, while the number of domestic flights is down slightly over the past 12 months, there are now 3.4 percent more seats for sale — too many to meet the demand in all cities. To fill those extra seats, airlines have had to offer discounts.

Still, airlines are being selective. Forget finding a deal for busy holidays or on Mondays, Thursdays and Fridays, when business travelers fly. The best prices are for flights on traditionally slow days like Tuesday, Wednesday and Saturday. And it helps if Southwest Airlines, Spirit Airlines or Frontier Airlines flies the route.

TIPS FOR FINDING CHEAP FARES

» Travel during off-peak times. Two of the slowest periods for air travel are Dec. 1 to 14 and then Jan. 4 to Feb. 15.
» Fly on slow days. Planes tend to have the most empty seats on Tuesdays, Wednesdays and Saturdays.
» Do a flexible date search. Sites like ITA Software and Cheapair.com let travelers pull up a calendar with the cheapest days to fly between two airports.
» Consider nearby airports. Driving an extra 50 miles might save $100 per person.
» Look for routes flown by Frontier, Southwest and Spirit. Other airlines are matching or beating their fares.
» Take advantage of the 24-hour rule. Passengers have 24 hours after buying a ticket to get a full refund. The day after booking a flight, check back to see whether fares have fallen. Cancel and re-book at the lower price.

For instance, Frontier recently had a sale for members of its club who pay an annual $50 fee. One-way tickets were being offered for $15, including taxes.

American Airlines and, to a lesser extent, Delta Air Lines and United Airlines are matching some of the discount fares. By doing so, they actually undercut the ultralow-cost carriers because Spirit and Frontier charge customers extra to use overhead baggage bins or to have a drink of water.

"They’re trying to force them out of the market, and they have the power to do this because they are making record profits," says George Hobica, founder of travel deal site AirfareWatchdog.com.

Spirit and Frontier each carries fewer than 2 percent of all domestic passengers. American, United and Delta made $6.6 billion in combined profits during the first half of this year, so they can afford to fight back on routes such as Chicago to Atlanta.

American spokesman Casey Norton says the airline "constantly looks at how we compete against a wide variety of airlines — from low-cost carriers to premium global brands."

Delta and United declined to comment. However, Delta has expanded its "Basic Economy" fare to more than 450 markets. Fliers booking these tickets typically save $15 each way but are not given advanced seat assignments, can’t cancel or change the flight, and are last to board.

Fare wars were destructive to the industry in the 1980s. Airlines were focused on being the largest carrier on a route, even though it often meant losing money.

Today’s airline industry is more disciplined, so the fare wars cause much less damage. The airlines still collect substantial fares on highly profitable business routes and for holiday travel. Additionally, they take in billions in dollars from checked-baggage fees and other things that were included in the ticket price back in the 1980s.

Even passengers unable to take advantage of today’s bargain-basement deals are getting a tiny bit of relief.

The average cost of a round-trip domestic ticket, including taxes, purchased during the first seven months of this year was $494.12. That’s down $5.41, or 1.1 percent, from the same period last year, according to the Airlines Reporting Corp., which processes ticket transactions for airlines and travel agencies.

Scott Mayerowitz, Associated Press

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