Passengers save in airlines’ dogfight

The first shot was fired by Southwest Airlines on March 19, officials at Reno-Tahoe International Airport said.

The first shot was fired by Southwest Airlines on March 19, officials at Reno-Tahoe International Airport said.

That’s when Southwest slashed summer travel prices in the U.S. to one-way rates of $49 to $99.

The low fares sent a shock wave though the copycat U.S. airline industry, sparking an airfare war among many airlines, industry experts said.

If anyone has summer vacation plans that include air travel, booking soon is advised.

“Now is the time to buy,” said Tom Medland, director of air service business development at RTIA. “The airlines right now are absolutely desperate to drive traffic. The demand is off, and they are doing everything they can to stimulate demand.”

Nationwide, airfares are down at least 14 percent from a year ago, as struggling airlines try to get people flying again.

“Let’s get back to the root cause of why this is going on, and it is the recessionary economy,” said Tim Smith, American Airlines spokesman in Fort Worth, Texas. “All airlines have seen decreased demand in the last four or five or six months.”

After Southwest made its move earlier this month, American and other major carriers, such as Delta, United, US Airways and Continental, also lowered fares. The slashing made a big impact at Reno-Tahoe. All of those cost-cutting airlines fly in and out of Reno-Tahoe except Continental, which pulled its popular Reno-to-Houston flights last year.

“That’s the crazy part of the airline industry,” said Howard Putnam, the former CEO of Southwest and Braniff Airlines who lives in Reno. “Whenever someone has these kinds of fares, someone else will always say, ‘I’ve got to match it’.”

And while the airlines battle, the passengers win, travel experts said.

Airlines must match the lower ticket prices to stay in the game, especially with the popularity of shopping for flights on the Internet, Smith said.

“In purchasing an airline ticket, it is so easy to compare, and it is such a transparent transaction that it puts an extreme amount of pressure on us to be absolutely competitive with every fare that comes into the marketplace,” Smith said. “You have to match it because we have learned many, many years ago that it only takes a few dollars to have a customer go across the street to a competitor.”

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Big deals

Consider the airfare deals that were available a few days ago:

By booking at least 14 days in advance, passengers from Reno could get to Chicago on American Airlines for about $100, one-way. On Southwest, they could book a flight to Walt Disney World in Orlando, Fla., for the same price.

“In the past, you would have seen strong summer bookings by now as the airlines looked ahead to June, July and August,” Medland said. “But they are not seeing that, so they made the decision to lower the fares.”

There is no guarantee that cheap airfares will last, although some experts foresee prices continuing to decline as summer nears.

“It is always possible that fares will go down,” said Brian Kulpin, public affairs manager at Reno-Tahoe. “But it is always possible that you can get a higher fee, too. While we think that airfares will go lower, we recommend that if you find a good fare out there, book it.”

Southwest’s impact

The price slashing is just the latest move in a turbulent industry and shows the impact Southwest has on domestic air service. The no-frills airline carried 102 million passengers in 2008, flying to 65 cities in 33 states. It has a fleet of 537 Boeing 737 jets, according to company documents.

The airline is especially important in Nevada, where it has more than 50 percent of the flights in and out of Reno-Tahoe and flies 37 nonstops to 11 cities.

Southwest is No. 1 at McCarran International Airport in Las Vegas, with 227 daily departures to 55 cities, a company spokesman said.

“Southwest is so big anymore across the United States that it impacts almost every market in the country,” Medland said.

Although Reno-Tahoe officials cite March 19 as a key date in the airfare war, the battle has been brewing for months, Smith said.

“We have seen this trend industry-wide long before this spring,” Smith said. “It has perhaps magnified a little bit in the last couple of months as more and more airlines initiate some kind of fare specials.”

Last July, the cost of oil peaked at almost $150 a barrel, prompting steep hikes in airfares, Medland said. Yet in September, demand dropped dramatically, and airfares began to come down. Many in the industry thought that the year-end holiday season would spark a fare increase, but they were wrong.

“We were looking for fares to jump up 20 percent for the holiday period, but that never materialized because the loads (number of passengers on each flight) dropped so drastically,” Medland said. “So it was December, Christmastime, when the airlines started cutting fares, so that is when it really began.”

Consider the airfare deals that were available a few days ago:

By booking at least 14 days in advance, passengers from Reno could get to Chicago on American Airlines for about $100, one-way. On Southwest, they could book a flight to Walt Disney World in Orlando, Fla., for the same price.

“In the past, you would have seen strong summer bookings by now as the airlines looked ahead to June, July and August,” Medland said. “But they are not seeing that, so they made the decision to lower the fares.”

There is no guarantee that cheap airfares will last, although some experts foresee prices continuing to decline as summer nears.

“It is always possible that fares will go down,” said Brian Kulpin, public affairs manager at Reno-Tahoe. “But it is always possible that you can get a higher fee, too. While we think that airfares will go lower, we recommend that if you find a good fare out there, book it.”

Southwest’s impact

The price slashing is just the latest move in a turbulent industry and shows the impact Southwest has on domestic air service. The no-frills airline carried 102 million passengers in 2008, flying to 65 cities in 33 states. It has a fleet of 537 Boeing 737 jets, according to company documents.

The airline is especially important in Nevada, where it has more than 50 percent of the flights in and out of Reno-Tahoe and flies 37 nonstops to 11 cities.

Southwest is No. 1 at McCarran International Airport in Las Vegas, with 227 daily departures to 55 cities, a company spokesman said.

“Southwest is so big anymore across the United States that it impacts almost every market in the country,” Medland said.

Although Reno-Tahoe officials cite March 19 as a key date in the airfare war, the battle has been brewing for months, Smith said.

“We have seen this trend industry-wide long before this spring,” Smith said. “It has perhaps magnified a little bit in the last couple of months as more and more airlines initiate some kind of fare specials.”

Last July, the cost of oil peaked at almost $150 a barrel, prompting steep hikes in airfares, Medland said. Yet in September, demand dropped dramatically, and airfares began to come down. Many in the industry thought that the year-end holiday season would spark a fare increase, but they were wrong.

“We were looking for fares to jump up 20 percent for the holiday period, but that never materialized because the loads (number of passengers on each flight) dropped so drastically,” Medland said. “So it was December, Christmastime, when the airlines started cutting fares, so that is when it really began.”

About the author

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Linda Hohnholz

Editor in chief for eTurboNews based in the eTN HQ.

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