Higher airfares eroded online

Recent drop in prices linked to Web deals

November 25, 2006|By New York Times News Service

CHICAGO -- 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 past 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 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 hassle, of flying may be easing.

None of this is good news for the airlines, of course, which always struggle to turn a profit. They 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 at 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 via e-mail message, and only travels 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, Calif., where her family lives, and her holiday plans were set.

"If you look awhile, you can figure it out," 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 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 such as kayak.com, itasoftware.com or sidestep.com, which scour other Internet sites for travel deals.

"Consumers have access to more and more information," Harteveldt said. "It's exactly what airlines don't want consumers to have."

In the long term, the sharp fare increases this year likely will 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 likely help moderate price increases.

Southwest, for example, bought 36 more Boeing 737s this year and expects to acquire 37 next year, growing as some traditional airlines have shrunken.

"We don't have enough aircraft," said Gary C. Kelly, chief executive of Southwest, the biggest low-cost carrier and the dominant one at Baltimore-Washington International Thurgood Marshall Airport.

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 cost: $1,700 per person. "It's a bit prohibitive," Ramandraivonona said.

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 20 percent or more over the same periods a year ago.

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.

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 Kronick consulted farecast.com, which tries to tell consumers the best time to buy an airfare.

"I don't know how accurate it is," Kronick said. "But it makes you feel better."

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