2011 will be remembered as the year when the ability to find cheap airplane tickets and cheap vacation packages was more important than ever given that airlines have increased ticket prices for the 10th time this year.

The only good news is that the latest higher prices are only going to impact expensive last minute tickets which are usually purchased by corporate travelers.

US Airways lead the most recent price increase in early September by increasing the price on people traveling the same day as the tickets are purchased by to round trip. Other major airlines, including American and Delta quickly matched US Airways higher prices.

Base airline ticket prices paid by passengers in May through July were about 9 percent higher than in the same three months last year. Airlines have continued to increase ticket prices to try to offset rising fuel prices.

Experts do not expect the latest increase in typical business fares to be quickly followed by an increase in leisure tickets purchased in advance of travel. Leisure travel is far more discretionary than business travel and thus far more negatively impacted by higher prices.

Determined to preserve their profitability, airlines are expected to attempt future price hikes and/or reduce the number of flights they will offer in the future.

American Airline’s Traffic Decreases

Since falling demand often leads to lower prices, the news that American Airlines traffic dropped in August may turn out to be good news for the future of cheap airplane tickets and cheap vacation packages.

American flew paying customers 11.46 billion miles in August which was a 0.4 percent decrease from the 11.51 billion miles flown in August of the prior year.

Domestic travel, which make up almost 75 percent of the airline’s operations, fell 2.6 percent, while international traffic increased 3 percent, largely due to growing trans-Pacific travel.

In a bid to reduce costs, American had cut back its passenger capacity a little over 1 percent, leaving it with 13.45 billion available seat miles.

The average American plane flew modestly fuller in August. Its occupancy rate was 85.3 percent last month vs. 84.6 percent the year before.

American, unlike Delta and US Airways, has not revealed how much it lost from Hurricane Irene in August which resulted in the cancellation of thousands of flights on the East Coast.

Delta put its losses at million from the hurricane, while US Airways projected losses ranging between and million.

American’s passenger traffic through August of 2011 is 1.4 percent higher than the prior year. Capacity is up 1.7 percent, while its average occupancy rate dropped to 82 percent vs. 82.2 percent last year.www.cheapfares.com

About the Author

Cheapfares.com employees enjoy sharing their travel points of view and latest travel news with others who might share similar interests.

http://goarticles.com/article/Select-Airfares-Rise-Again/5345147/

Over the last few weeks, airlines have quietly cut their fares. This has been attributed to the sharp drop in the price of aviation turbine fuel. ATF accounts for as much as 45 percent of an airline’s costs, and its price has declined by about 60 percent since last September to Rs 31,176 per kilolitre. Today, the price of ATF is down to what it was in July 2005.

The fare cuts could make a big difference for passengers. If you are looking to fly from Mumbai to Delhi this Friday and get back on Monday morning, you would pay just over Rs 4,500 for the ticket as against at least Rs 8,000 not too long ago – a fall that’s over 40 percent.

And it’s not as if the story is restricted to flights between high-traffic destinations. A round trip between Mumbai and Bhubaneswar that cost as much as Rs 8,500 is now down to a more affordable Rs 5,600.

Airlines have had little choice but to cut fares despite their numbers being under pressure as they need to get more people flying again. With most airlines reporting operating losses along with unused inventory, it makes sense to discount to a certain extent to fill capacity, Deep Kalra, CEO and founder, makemytrip.com, says.

Historically, it paid to book tickets in advance. That is the case this time round as well. A round trip between Delhi and Bangalore one of the busiest routes in the country could cost the traveller less than Rs 5,000 if booked now for the weekend beginning March 6. On the contrary, the corresponding fare to fly during the ensuing weekend is about Rs 1,500 more. The advance purchase fare is a win-win offer for both business and leisure travellers, says Sanjay Aggarwal, CEO, SpiceJet.

The drop in fares is not restricted to just domestic flights. Carriers like Air India and Singapore Airlines have also announced significant cuts. Airlines need to stimulate the market as load factors are falling since August despite a contraction in fares. Aggressive pricing is one way to achieve that, but it may impact them in the long run, Mark Martin, senior advisor, KPMG, says.

We cut fares by more than 50 percent in the last two months as ATF prices came down drastically. This will increase passenger traffic in the coming months, Air India’s spokesperson J Bhargava said. Likewise, Singapore Airlines has slashed economy-class fares by 52 percent to Singapore and other Southeast Asian destinations from India.

The question is how long can airlines sustain these fares. The drop in airfares was a reactionary gambit from airlines following the decline in ATF prices. It does not appear to be a part of a long-term strategy, thinks makemytrip.com’s Mr Kalra.