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Thu, Aug 10, 2006

Airlines Starting Fare Price War?

After months of rising ticket prices, United Airlines has kicked off a fare war among US airlines cutting hundreds of leisure ticket prices and prompting other carriers to do much the same.

Unrestricted fares remain the same but advanced tickets are dropping in price. Mond you, this is happening after six turbulent months of record fare increases. In the first half of this year, the cost of air travel has risen more than eleven percent. Flights are more crowded as well. Even though the number of passengers remains about the same as this time last year, airlines are flying fewer planes and flights are much more full than they were even a year ago.

Seat occupancy now stands at a record 85.8 percent.

Is this fare war a sign of a weakening market? United says no, but some experts disagree. Ricky Seaney, CEO of the website, tells CNN passengers are getting a little cranky about rising prices and fuller flights. Other experts point out that after losing 42-billion dollars since 9/11, the airlines are just now starting to see profitability again.

Now, with expectations of a slowing economy and a continued rise in fuel prices, the airlines are worried that they might once again slide below the bottom line.



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