Is Holiday Airfare War On the Way?

Lower fuel prices and a bad economy could be good news for travelers

The price of fuel has dropped. The economy is in the tank. People are traveling less. Will the airlines drop their fares to boost demand? Perhaps. The price of flying some popular routes appears to be falling.

Some major carriers are trimming the cost of checked-baggage fees. And most domestic carriers have eliminated fuel surcharges -- although they aren't passing the savings on to customers.

Right now, a nonstop, four-day trip booked 14 days in advance for mid-December between New York's Kennedy Airport and Los Angeles International Airport costs between $268 and $278 on Delta Airlines, Virgin and United Airlines.

Experts who talked with the Chicago Tribune predicted a return to $198 round-trip fares on the same route. Pricing also appears to be easing on flights to traditional vacation spots such as Hawaii. The Tribune reported that an off-peak, round-trip ticket from Los Angeles to Honolulu on Delta sold for $244 last week, compared to about $800 to $1,000 in the summer.

Such news has been greeted warmly by the Bank of Hawaii's chief economist, Paul Brewbaker. He recently lowered the state's projections for visitor arrivals and jobs for the remainder of year and 2009, but he said Hawaii has very quickly become a comparatively much more affordable destination than it was a year or two ago because of lower airfares and hotel room rates.

Lower fares may extend beyond the holidays.

Last week, Southwest put an exclamation mark on its entry into the Minneapolis-St. Paul market with eight flights a day to Chicago's Midway airport for as little as $69 each way, beginning in March.

Competitor Northwest, now part of Delta, dominates that market. On Tuesday, Northwest, United Airlines and Delta all charged $258 for a nonstop, four-day trip booked 14 days in advance for mid-December

And last week, the cheapest one-way airfare on Northwest (and American and United) between the Twin Cities and Chicago was about $426 one-way, according to <a href="FareCompare">FareCompare</a> CEO Rick Seany.

But Northwest's owners said they would match the Southwest prices and add extra flights once Southwest's service starts in the spring.

Meanwhile, the falling price of aviation fuel won't likely be passed to customers, Seany said. Most major carriers have jettisoned their fuel surcharges on domestic flights, led by American Airlines last week. But he warned not to expect any savings to be passed to customers yet. Ticket prices have remained steady as the airlines seek to make their routes more profitable.

 USA Today reported that on Nov. 1, American's base fare on a four-day advance-purchase round-trip ticket between Dallas/Fort Worth and Washington, D.C., was $850, including a $170 fuel surcharge. On Nov. 6, the same ticket cost $850 without the fuel surcharge.

Also out today is a new survey of the airline industry may offer hope of fewer hassles in the future, but its authors said things don't look good for the coming holiday season.

The Airline Quality Rating looks at the performance of the nation's 17 largest airlines.

It finds that airline quality has plunged during the Thanksgiving to New Year period over the last three years, with things bottoming out in December.

"The best bet for the consumer is to travel as early before the actual holiday or as late as possible afterwards," Dean Headley, AQR co-author and marketing professor at Wichita State University, said in a prepared statement.

American Airlines was found to have the worst on-time performance, while American Eagle had the most mishandled baggage. United and Atlantic Southeast also showed up on the "worst" lists, with United getting the most customer complaints.

Those planning a trip to Hawaii might get a bonus. The survey finds Hawaiian Airlines has the best on-time performance. JetBlue, AirTran and Southwest also scored in the "best" categories.

While the survey's authors said there are preliminary signs that airline performance may be improving, they note that may result from fewer people actually flying.

"We have a mixed blessing of hope and these data show very preliminary indications that performance scores are progressing upward. We are not seeing the full impact of capacity reduction yet, say like late 2001, but we are looking at something of similar scope," Headley said.

He added that if the signs keep improving in the last quarter of 2008, "holiday travel could actually be better than expected."

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