It might just be true. We may have been too glum in predicting really sharply higher fares for the holidays. It seems that weakening demand has produced some deals for flights around the big travel days to the big travel spots. We keep hearing stories and have even seen a little bit of evidence. Priceline, which compiles lots of fares, says some fares have fallen nicely in just the past week, while Amy Ziff, who writes an in-house blog for Travelocity, says that the on-line travel agency’s “most recent data shows a steady decline in airfares over the last five weeks, with an average price drop of $53. Softening travel demand is translating into lower prices for travellers.” Those are the magic words: softening demand.
As we said the other week, things look weak, and Continental just posted anaemic main-line passenger unit revenues. Mike Linenberg of Merrill Lynch calls this “the accelerating decline in demand,” which grammatically is challenging but alas is true. Domestic mainline unit revenues were up “roughly a half percent in November, meaningfully below Continental’s initial ‘teen’ guidance as well as its recently diminished 5% forecast,” notes JP Morgan’s Jamie Baker.
The carriers aren’t yet forced to take the drastic step that The Onion is reporting: charging fees to people who aren’t travelling. This is a joke, we stress. So far.