Airlines fly into new year with wave of fare sales

By: AP
By: AP

ATLANTA (AP) -- A wave of fare sales has spread across the airline industry in the early days of the new year as the weak economy continues to put pressure on carriers to fill seats even after they drastically reduced capacity and some expressed willingness to cut more.

Many experts and even executives at some airlines had expected that after deep capacity cuts went into effect starting in September, the number of fare sales going forward would be fewer and farther between. But fuel prices have come down significantly, and the weak economy has eroded demand for air travel.

Even so, on average base airfares outside of the travel periods for the recently launched sale fares are higher today than in the last few years, said Rick Seaney, head of airfare research site FareCompare.com. He noted there were 30 attempted airfare hikes between summer 2007 and summer 2008, two-thirds of which were successful.

It's not unusual for airlines to announce fare sales in January - there were 17 or 18 announced in January 2008 - but what's different for several carriers this year is that the discounts are for travel extending as late as April, May or June, Seaney said. The sales last January were typically for travel through March, he said.

Seaney said he believes uncertainty in the economy is the reason for the change.

"They're not sure what's going to happen at the last minute," Seaney said.

A handful of major carriers and discount carriers have launched fare sales since Dec. 31. Others are expected to follow with sales of their own, or to at least match discounts offered by rivals on competitive routes, Seaney said.

Discount carrier AirTran Airways, a subsidiary of Orlando, Fla.-based AirTran Holdings Inc., said Tuesday it was offering a nationwide fare sale with one-way fares starting as low as $39. The fares, available for purchase through Jan. 15, are good for travel to and from Florida and San Juan, Puerto Rico, through March 11, while all other sale fares are good for travel through May 20.

"We are uncertain about the economy and we are trying to build business on the books for the winter and spring," AirTran spokesman Tad Hutcheson said.

Burlingame, Calif.-based Virgin America, a U.S. controlled and operated airline that is a separate company from Virgin Atlantic, also announced a fare sale Tuesday for travel through June 10 to all of the cities the carrier serves. (Billionaire Richard Branson's Virgin Group is a minority share investor in Virgin America.)

New York-based JetBlue Airways Corp. said Monday it was offering a fare sale involving more than 40 destinations in the Northeast, Florida, California and the Caribbean. For most city pairs, travel must take place between Jan. 12 and April 1.

Other carriers that have launched fare sales recently include Dallas-based Southwest Airlines Co - for travel between Jan. 15 and April 30; Fort Worth, Texas-based AMR Corp.'s American Airlines - for travel within the U.S. between Jan. 14 and March 4, and between March 5 and April 30 at slightly higher fares; and Chicago-based UAL Corp.'s United Airlines - for travel within the U.S. from Jan. 14 to March 4 and for travel to several foreign destinations as late as April 30.

United's fare sale was launched Dec. 31. It has done a New Year's fare sale for several years now, spokeswoman Robin Urbanski said.

Most of the airline offers come with restrictions that vary by carrier from advance purchase requirements to minimum stay requirements to blackout dates.

The matching has already started.

American matched both the AirTran and Virgin America initiatives in markets in which they compete, American spokesman Tim Smith said.

In normal situations, travelers generally see more airline fare sales from September through mid-February, with exceptions for peak holiday periods, Smith said. But now, the economy is sputtering.

"Obviously, less demand has had some effect on fare sales, but again most are aimed at targeted markets and many of the sale fares are at somewhat higher levels than past sales," Smith said.

Last year, airlines cut jobs, made dramatic reductions in capacity, sold aircraft, raised fares and imposed new fees for checked baggage and other once-free amenities to stem the bleeding from losses that were expected, by one analyst's estimate, to total $4 billion for 2008, excluding one-time items. If oil prices remain low and the economy doesn't worsen, some analysts expect the industry to be profitable in 2009.

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