Posted February 24, 2009 by Carl Unger
That's right, the month of January saw another drop in airfare—3.9 percent, to be exact—for domestic flights. Well, let me rephrase that: Yield dropped by 3.9 percent, and yield, which measures the average price paid to fly one mile, is generally considered an excellent indicator of the direction of fares. In December, yield dropped 0.4 percent, marking the first decline since September 2007.
So what does this all mean? Cheap airfare! Woo hoo! Ah, but we're in a recession. Boo hoo?
Indeed, it's true that prices are falling, meaning more and more deals are available to people looking to travel, but that does't mean more people are traveling, or that any of this is good for the industry. In fact, so few people are traveling that airlines have no choice but to slash fares … so much that the airlines are struggling to make money off them. That, my friends, is a recipe for trouble.
Despite all the fees and fare hikes from last year, airlines are still struggling to break even. Remember that those extra charges were in response to record-high fuel prices, and while the fees were annoying, they were, to a degree, necessary. They certainly didn't result in the airlines making money hand over fist. Now remove a huge amount of demand and, well, you can see where this is going.
But if travel is on your horizon, consider yourself lucky. It's a great time to snag a cheap flight!
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