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Travelocity says air fares are leveling off

Air fares are beginning to show signs of stabilizing. For travelers, that means the strategy of waiting to book so prices can drop even more has probably run its course.
/ Source: The Associated Press

The great airline sale of 2009 may be ending.

Air fares, which had declined steadily throughout this year, are beginning to show signs of stabilizing. For travelers, that means the strategy of waiting to book so prices can drop even more has probably run its course.

Fares in general are still much lower than they were last year — Travelocity reported that fall airfares fell 14 percent compared with fall 2008. That's not as sweet as the summer months, however, when fares were down 18 percent.

Genevieve Shaw Brown, Travelocity's senior editor, checked prices for travel for the period from Labor Day to the weekend before Thanksgiving. When she checked on July 15, fares during that period were running 15.3 percent lower than a year ago. By Sept. 15, they were down only 14 percent.

"That suggests to me that airfares are stabilizing," she said.

The good news for travelers is that airlines are still running sales. In fact, says Tom Parsons, CEO of discount travel site, they seem more widespread this year.

"It's like every other day has an airfare sale from someone," he said.

But Southwest, for example, isn't discounting as deeply as it used to. Parsons said airfares that once sold for $99 each way are now going for $149 each way. Still, Southwest is running its current sale through Feb. 11 (much further out than many airfare sales) although tickets must be purchased by Oct. 15.

"Are price points going up? Yeah. I think the lower price points are," Parsons said.

Meanwhile, low-cost carriers have spread around the country to the point that they compete as much with each other as they do with big carriers like Delta and American. Parsons said that it looks like JetBlue has been trying with limited success to charge $159 or more each way between the East and West Coasts — a bread-and-butter route for the carrier.

"They're trying like the dickens to get it there, but because of Virgin and some other competitors they've been forced to bring it back down again," Parsons said.

A check on Monday showed JetBlue fares between New York and San Francisco for early November running between $109 and $174 each way.

None of this means the large airlines are out of financial trouble. They've been using sales to fill seats. But they're still waiting for revenue to get better, and business travel will need to pick up for that to happen. So far this year business travelers, if they fly at all, have been increasingly flying coach and taking advantage of the same fare cuts that vacationers have benefited from.

Parsons noted that many of the hub-and-spoke airlines have dropped the usual requirement for a Saturday-night stay on sale fares. In the past that was a way to keep business travelers, who generally want to be home for the weekend, from using fare sales aimed at price-conscious leisure travelers.

Travelocity's Brown attributed the leveling-off in fares to airline capacity cuts that took effect about a month ago. Airlines cut capacity by flying fewer, or smaller, planes. They do that to avoid the expense of flying empty seats, and to try to charge more for the seats they can fill.

But while an airline can park an unneeded plane in the desert until it's needed again or sold, hotels can't do the same thing with empty rooms. Travelocity said average daily hotel rates for the fall are down 16 percent year-over-year — a steeper decline than the 13 percent price drop seen in the summer.

Brown noted that those rate declines also don't factor in hotel giveaways like free nights, breakfast and other promotions.

"It doesn't make any sense to have an empty hotel room," she said. "Those hotel rooms are essentially on sale."