Uncertainty Fuels Airline Price Cuts

Excerpted from the Miami Herald, “Airlines cutting prices to stay aloft during recession, ” By Harry Weber, Jan 7, 2009

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A wave of fare sales has spread across the airline industry…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…

It’s not unusual for airlines to announce fare sales in January…but what’s different for several carriers this year is that the discounts are for travel extending as late as April, May or June..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…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…

Discount carrier AirTran Airways said Tuesday it was offering a nationwide sale with one-way fares starting as low as $39…”We are uncertain about the economy and we are trying to build business on the books for the winter and spring,’

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