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Will Fares Go Up Or Down In 2009?!  
User currently offlineXkorpyoh From United States of America, joined Oct 2004, 821 posts, RR: 0
Posted (6 years 1 month 2 weeks 2 days 5 hours ago) and read 4841 times:

I see conflicting info regarding fares going up next year because of the lower capacity or that the fares will go down because the economic downturn and lower demand.
What do you think?

This is the view from AirlineForecasts:
"combination of plummeting oil prices and weak traffic likely will prompt substantial reductions in airfares next year, according to a new outlook by AirlineForecasts. Average fares next year should fall between 7% and 10%, and possibly as much as 12%, depending on fuel prices and traffic trends". "other key driver is reduced demand, especially from consumers beleaguered by shrinking home values, unemployment and other factors pinching their expenditures" "Traffic and load factors will be “horrible” first quarter of 2009, are seen as placing considerable downward pressure on fares, especially when combined with cheaper fuel"
http://www.travelweekly.com/Article.aspx?id=182142

Isn't jet fuel more expensive than regular fuel and the price not dropping as sharply?
Is this pessimistic view realistic or are airlines controlling yield with capacity cuts?
I thought the airlines were finally able to increase fares to realistic levels and will keep it that way by focusing on good yields rather than market share that make them loose money.

6 replies: All unread, jump to last
 
User currently offlineDLPMMM From United States of America, joined Apr 2005, 3602 posts, RR: 10
Reply 1, posted (6 years 1 month 2 weeks 2 days 5 hours ago) and read 4841 times:

I think airfares will go both up and down over the next year, depending on the route, class, and fare basis.

User currently offlineXkorpyoh From United States of America, joined Oct 2004, 821 posts, RR: 0
Reply 2, posted (6 years 1 month 2 weeks 2 days 5 hours ago) and read 4841 times:



Quoting DLPMMM (Reply 1):

for example, very competitive on leisure markets and those shared with LCCs, but higher fares on business markets and hubs-to-hubs?


User currently onlineFlighty From United States of America, joined Apr 2007, 8770 posts, RR: 3
Reply 3, posted (6 years 1 month 2 weeks 2 days 5 hours ago) and read 4841 times:

Fares overall will go down. When the economy is weak planes are emptier and in this case at least, oil prices are lower.

Look at 2001-2002-2003 for another example of rock bottom low fares, weak economy, and low oil prices.


User currently offlineAA737-823 From United States of America, joined Mar 2000, 5947 posts, RR: 11
Reply 4, posted (6 years 1 month 2 weeks 2 days 2 hours ago) and read 4743 times:



Quoting Xkorpyoh (Thread starter):
Isn't jet fuel more expensive than regular fuel

What do you mean by "regular" fuel? Kerosine? Gasoline? Diesel?
Jet fuel is cheaper than gasoline, if that's what you mean.

As far as the question of prices up or down, I suspect steady or up.
If the demand slackens as is suggested in this article, then capacity will be cut to match it. Capacity is already on the downswing; if the carriers see that the capacity cuts weren't deep enough, I expect layoffs and parkings like never before.

OR, maybe they'll just come up with NEW FEES, and one by one lie and then get on the bandwagon. Like Delta and their recently implemented first bag fee.


User currently offlineXkorpyoh From United States of America, joined Oct 2004, 821 posts, RR: 0
Reply 5, posted (6 years 1 month 2 weeks 2 days 2 hours ago) and read 4708 times:



Quoting AA737-823 (Reply 4):

I agree with you. I believe the legacy airlines would rather reduce capacity than lower fares.
The only new fee that comes to mind that airlines might introduce would be the carry-on-fees disguised as "priority boarding fees" like Ryanair has (basically, you board first to find space to put your carry-on bag))

regarding the fuel difference, I was referring to Jet-A fuel (similar to kerosene) being more expensive than gasoline used for cars.

"Typically, more kerosene can be extracted per gallon of crude than can of gasolines, making it cheaper in bulk. Molecular cracking has changed much of that in modern refineries, driving the cost of kerosene and diesel higher"


User currently offlineTomFoolery From Austria, joined Jan 2004, 529 posts, RR: 2
Reply 6, posted (6 years 1 month 2 weeks 1 day 23 hours ago) and read 4642 times:

I also think that the deciding factor will be the FEES and Taxes, and other items that are added onto the Fare.

I just booked a flight on a major carrier for €59 r/t from MUC to IAD, but the taxes and fees were €299.

The EU passed legislation that requires that the full price (inclusive fees and taxes) be displayed, so to some, the COSTS will appear to go up, but the actual base fares will likely be the same.

In the us, pretty much the same- Fares will be stable, but the fees will be in flux, to respond with industry trends.

I see fuel charges going away, and marketing will focus on this accordingly.

tom



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