Falling Airfares?

It sure seems like plummeting fuel prices would equate to plummeting airfare prices – oops, sorry just kidding. We know better than that don’t we, but we can still hold out hope that the increases will start to taper off. The following article gives a realistic appraisal of what is to come in the world of airfare prices. It includes some simple and practical ideas for scoring the lowest prices in whatever environment the market brings.

 

The good news is that fares are likely to stay steady. The bad news is they were high to start with.

Good news, bad news for anyone hopping on a plane in 2015: Airfares will likely not rise significantly in the new year compared to 2014, and a few cities will actually see prices drop. Unfortunately, domestic airline tickets are the highest I’ve seen in ten years.

It’s a perfect storm; perfect for the airlines, that is. Here are the storm’s components.

• Supply and demand. Airlines were caught flat-footed by people saying “no” to travel twice in the past dozen years or so (the post-9/11 slump and the recession of 2008), but the industry quickly got its act together as the survival instinct cut capacity to the point that empty seats were almost as rare as meals in coach. Today, people want to fly and a hair under 60 million of us did just that in September alone.

• Competition. Where did all the airlines go? Mergers, mostly. As American puts the icing on its merger with US Airways, loss of competition has become the hallmark of early 21st century air travel. Today four U.S. carriers control about three-quarters of all domestic flights and if you’re reading this in the air, chances are you’re flying one of them: American, Delta, United or Southwest.

• Fuel. In the past six months, oil prices have dropped more than 45%. A mid-range aircraft like Boeing’s popular 737-800 holds almost 7,000 gallons of jet fuel so that’s a lot of savings, but airlines aren’t passing it on to customers in lower airfares because they don’t have to. There is no incentive as long as demand is steady, and that’s exactly what’s happening.

Right now, the airlines have everything they want. So confident are they of continued demand, they aren’t afraid to risk angering lower-paying leisure travelers with new checked-bag fees (JetBlue) or new multi-tier prices that effectively add an advance seat selection fee for basic economy (Delta).

Higher-paying business travelers have it better. They actually are seeing some of the fuel savings in the form of shiny new planes loaded with goodies just for them, like lie-flat seats and extensive entertainment options.

Of course, it could all change in a heartbeat. If oil prices suddenly soar, it could trigger all sorts of economic ailments that could lead travelers to skip this year’s trip to Disney World or delay the vacation in Italy. If enough say no, airfare prices will drop – but you don’t have to wait on geo-politics to cut airfare costs right now.

How to fly more cheaply in 2015

Most of this will only work if you make a conscious decision to be as flexible on travel plans as possible.

• Find competitive destinations. Airfare prices for some cities will drop; see red-hot markets like Dallas (thanks to the end of the Wright Amendment) or typically cheap cities like Boston, Denver and Dublin.

• Force yourself to be flexible. Everyone strives to make the most of vacation days with Friday-Sunday weekend itineraries and seven day trips with Sunday returns but that plays right into airlines’ hands. If possible, fly mid-week on a Tuesday or Wednesday or if you must travel the weekend, fly on Saturday. If you can’t do this, fly unpopular times such as dawn or overnight.

• Fly when no one wants to. The big dead zone of January/February is right around the corner; fly it and save a ton over peak-season fares to most destinations.

FareCompare CEO Rick Seaney is an airline industry insider and top media air travel resource. Follow Rick (@rickseaney) and never overpay for airfare again.

 

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