After two years of steadily raising fares as fuel prices soared, U.S. airlines are slashing prices dramatically in an effort to fill empty seats.
Travelocity, an online booking service, estimates that airfares for the 100 most popular domestic and international routes have fallen to 24-month lows and are 40% lower than last June, when they peaked.
Some round-trip tickets between San Francisco and Boston, New York or Washington cost less than $250 at UAL's (UAUA, news, msgs) United and AMR's (AMR, news, msgs) American, down from $350 to $400 a year ago; some round-trip tickets between New York City and Amsterdam, Madrid or Frankfurt have fallen below $400 on Continental Airlines (CAL, news, msgs), from between $600 and $700 a year ago; and tickets between Chicago and Sydney can be had for less than $1,000 -- down from more than $2,000 a year ago, according to industry fare trackers.
Price-cutting isn't what airlines had hoped to be doing in 2009.
During last year's surge in oil prices -- which peaked above $140 a barrel in July -- air carriers axed thousands of jobs, streamlined operations and cut capacity. Through it all, they systematically avoided price wars. As a result, most of the big U.S. carriers appeared well-positioned for a payoff in profits once oil prices began falling.
Now, fuel prices are down sharply -- but consumers are shutting their pocketbooks.
Rosalind Rubens Newell, a 48-year-old Atlanta attorney, flew to Las Vegas and St. Kitts on vacations last year. But she has no travel plans for 2009. "I'm really trying to be prudent," she says.
With consumers reluctant to fly, fare sales are proliferating.
"I don't remember a year other than 2001 that we've seen this kind of commotion in airfares," says Tom Parsons, the chief executive of Bestfares.com, a discount travel Web site.
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Rick Seaney, the chief executive of FareCompare.com, an airfare-comparison Web site for consumers, says would-be fliers can find some of "the best deals since the beginning of the century."
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For instance, he notes, Northwest Airlines, now part of Delta Air Lines (DAL, news, msgs), and other carriers are hawking round-trip fares for as little as $125 to fly between Minneapolis and Chicago, after fares rose as high as $350 last year.
Discounts on long-haul flights also are growing -- helped in part by falling fuel surcharges. Parsons, at Bestfares.com, said flights between New York City and Honolulu can be had for $539 instead of $1,098 a year ago; Los Angeles-Honolulu is $339 instead of $540. Fuel surcharges were up to $90 a year ago for Hawaii and are zero now.
Multiple airlines recently began offering special round-trip fares to Dublin, Ireland, from cities such as Dallas and Los Angeles for around $700. The same seats cost more than $1,000 last year. Although airlines continue to charge $200 or more in surcharges for some other destinations, the fuel fee is now only $14 for Dublin.
Continued: 'So disgustingly cheap'
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