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November 23, 2006
Armed With Internet Bargains, Travelers Battle High Airfares
By JEFF BAILEY
CHICAGO, Nov. 22 — Air travelers, who have endured full flights and a 15 percent increase in ticket prices this year, are exacting revenge with aggressive searches for deals that analysts say are beginning to force down prices.
Airlines use powerful computers to figure out just how much passengers are likely to pay for any given flight at various times of the day. For the last year or so, they have been able to readily increase fares, in part because of the strong economy. Planes have been packed lately, too, which gives the industry more power to raise prices.
But a recent drop in fares suggests that many travelers have had enough. They are balking at paying the higher prices and are scouring the Internet more to find cheaper fares.
That may be a small comfort to the 25 million people packed into full planes to join families for Thanksgiving this season. But it is a sign that the cost, if not the frustration, of flying may be easing.
None of this is good news for the airlines, of course, which always struggle to turn a profit. Airlines have said for some time that Internet shopping has made it harder for them to raise fares. Travelers have never had much sympathy for the industry’s financial plight and they often delight in finding new tricks to discover low fares.
Acacia Newlon-Yafai, a 20-year-old student at the University of California, Los Angeles, is one of them. She searches Web sites like cheaptickets.com for low fares, signs up at airline sites to receive fare-sale alerts by e-mail message and travels only when the price is right.
A month ago, a Southwest Airlines service called Ding sent her an e-mail message about a $128 round-trip fare to San Jose, where her family lives, and her holiday plans were set. “If you look a while, you can figure it out,” Ms. Newlon-Yafai said. “If you want to fly two weeks in advance, you can’t do that.”
Such hard-nosed shopping is on the rise. About 25 percent of air travelers consult online newsletters and other sources of special deals before buying, up from 17 percent last year, according to Henry H. Harteveldt, a travel analyst at Forrester Research. And 17 percent of travelers use Web sites like kayak.com, itasoftware.com or sidestep.com, which scour other Internet sites for travel deals.
“Consumers have access to more and more information,” Mr. Harteveldt said. “It’s exactly what airlines don’t want consumers to have.”
In the long term, the sharp fare increases this year will probably be an anomaly. The 15 percent rise in fares, after all, resulted in large part from a sharp contraction of airline fleets brought on by bankruptcies and a drop in air travel after the terrorist attacks of Sept. 11, 2001. In coming years, the growth of Internet fare shopping, and the expansion of low-cost airlines will most likely help moderate price increases.
Southwest Airlines, for example, acquired 36 additional Boeing 737s this year and is expected to acquire 37 next year, growing as some traditional airlines have shrunk.
“We don’t have enough aircraft,” said Gary C. Kelly, chief executive of Southwest, the biggest low-cost carrier.
Andry Ramandraivonona, an investment banker who lives on the Upper East Side of Manhattan, booked flights to Boston for himself, his wife and their two small children two weeks ago, using itasoftware.com. He paid $100 round trip for each.
The family would like to go home to Paris for Christmas, but was put off by the $1,700-a-person cost. “It’s a bit prohibitive,” Mr. Ramandraivonona said. They may delay the trip or make the trip sooner.
Leisure fares, those bought far in advance with restrictions, averaged $90 one-way last week on domestic routes, 9 percent lower than a year earlier and the 10th consecutive week of decline for leisure prices, according to Harrell Associates, a travel consulting firm in New York.
Business fares, which are typically booked at the last minute and carry few restrictions, averaged $479 one-way last week on domestic routes, 8 percent higher than a year earlier. But the rate of increase has slowed markedly from spring and summer when business fares were rising by 20 percent or more over the same periods a year ago.
While the tide is shifting toward consumers on prices, they should probably give up hope of counting on an empty seat next to them when they fly. The number of planes in the fleets of airlines in the United States is growing slowly. And a reason consumers are able to find more deals online is that airlines are using such systems to fill seats that might go vacant. After all, any revenue they can bring in for a seat is better than nothing.
Industry analysts said that flights could very well average close to 80 percent full for years to come, which means that those on popular routes at convenient times are typically 100 percent full.
One thing could, however, send fares back up sharply, at least temporarily. US Airways offered last week to buy Delta Air Lines, which is operating in bankruptcy, for about $8 billion. US Airways has said it will reduce the carrier’s combined fleets by about 10 percent if the deal goes through.
Taking 80 or so big jetliners out of service would allow the combined airline — and others — to raise fares because there would be less competition in some markets. Delta is opposing the offer and wants to remain independent.
Higher fares appear to have affected many people’s travel plans this year. Many more bought tickets to fly on Thanksgiving Day, arriving at family gatherings a little later but at lower cost, according to Sabre, which operates a vast computer reservation system. And skipping grandma’s house altogether was also more popular, as Las Vegas rose to the No. 3 travel destination over the holiday, from No. 8 last year, Sabre said.
When airlines put their fare information online years ago, their main goal was to cut out traditional travel agents to save the commissions they paid them. But many airlines were surprised to learn how much time consumers were willing to spend shopping for fares.
Dr. Steve Kronick, an emergency room physician in Ann Arbor, Mich., said he searched Internet sites for weeks this summer to find affordable seats to take his wife and two children to Seattle to see friends this week. They paid $1,400 for four round-trip tickets on Northwest Airlines after Dr. Kronick consulted farecast.com, which tries to tell consumers the best time to buy an airfare.
“I don’t know how accurate it is,” Dr. Kronick said, “but it makes you feel better.”
George W. Evans, a graduate business student at Emory University in Atlanta, paid $500, about $100 more than last year, for a round-trip flight this week to visit family in Pelham, N.Y. Earlier this year, he worked on a class project about Delta Air Lines and was part of a group of students who presented their work to some Delta executives.
“They told us their strategy this year was going to be to raise fares,” he said. “I heard it from the horse’s mouth. It was right after I bought my tickets. I felt used.”
Even with the higher fares, of course, the airline industry remains deeply troubled after more than $30 billion of losses in recent years. And airfares, compared with the rising prices of many other goods and services, have remained quite cheap over time.
Kiki Morris, who works in the entertainment industry in Los Angeles, paid $500 a month ago for her ticket to New York on JetBlue Airways. She usually pays $100 for a Lincoln Town Car just to get her to the airport in Los Angeles, but this time took a regular taxi, for $50, instead.
The price to fly one mile on an airliner, about 12 cents on average domestically, has changed little over the last 20 years. And, taking inflation into account, prices have fallen by nearly half.
“Airfares are so cheap,” said Roger King, an analyst at CreditSights. “A brake job on your car at the dealer is like $500 now. The airlines are just killing each other on these fares.”
Still, for many, fares are high enough that the ability to travel is limited. “It made me decide between Thanksgiving and Christmas,” said Tammy Rowe, 30, a public relations worker in Chicago who flew to Atlanta yesterday to meet family. “I noticed back in the spring and summer that fares were kind of jacked up.”
Ramona Collins, 33, of Flushing, N.Y., flew to visit her brother in Arkansas yesterday on Northwest Airlines. Her round-trip ticket cost $402, she said, purchased in mid-October on kayak.com. “It was probably at least $100 more than last year,” she said.
“It makes me think about not going anywhere for Christmas,” she said. Normally, she would go to Arkansas to see her parents.
She is reconsidering, and added, “They don’t know that yet.”
Reporting was contributed by Cindy Chang in Los Angeles, Nick Bunkley in Detroit, Brenda Goodman in Atlanta and Cassi Feldman in New York.
