Once-in-a-Lifetime Airfares: Will They Last?

American Airlines offers a $205 round-trip flight from Baltimore to Moscow.

ByColumn By RICK SEANEY <br/> FareCompare.com CEO
November 18, 2008, 12:10 PM

March 18, 2009 &#151; -- Nobody wants to pay retail. Not these days.

Just look at the Internet: People are Googling bargain-related terms like crazy. For instance, take the word "coupon" -- the use of that word alone zoomed to 19.9 million searches in the past year (and is probably why Spirit Airlines gave "coupon" such prominence in a recent airfare sale campaign).

Ah, sales. Spirit is not alone. Today, the airlines feature a seemingly never-ending cycle of sales that has "trained" us to expect bargains. And oh, how the airlines are paying for this.

But about those deals: Today's airfare sales are absolutely sizzling.

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Case in point: Last week, several airlines dropped their prices below $500 for round trip flights to Moscow. No, not Moscow, Idaho -- I'm talking Russia. Then, American Airlines jumped in and suddenly, you could fly to Russia and back for $200.

One AA fare was round trip from Baltimore to Moscow for $205 -- and according to my weekend calculations, it was actually cheaper to fly to Moscow (from Baltimore) than round trip to Madison, Wis. Cheaper to fly to Moscow than to Monterey/Carmel, Calif. Cheaper to fly to Moscow than to Moline, Ill. -- wait, no, I spoke too soon: It cost a whopping $19 more to fly to Moscow than Moline -- sorry about that.

What's going on? More to the point, why? And what should you be doing?

First of all, you have to understand that this is an absolutely crazy airfare environment. The airlines are trying to fill up their planes but people are procrastinating -- while others just aren't flying. Meanwhile, an empty seat is worthless to an airline.

So, we get the yo-yo price game: when nobody's buying tickets, prices take a dive. When people start buying, prices creep up.

It wasn't supposed to work like this -- the airlines were trying to get away from "price is everything" with the introduction of "a la carte" pricing.

Balancing Fees and Low Fares

OK, so charging for water and soda didn't work out for US Airways, and they backpedaled -- but JetBlue will gladly sell you a blanket, and many carriers will be happy to check your bag for a hefty fee, and most will charge for food.

In fact, Southwest Airlines -- of no-frills fame -- made a bit of news last week, when a spokesperson commented that selling snacks and sandwiches on board "was intriguing to us."

Less intriguing -- certainly for passengers -- is Spirit Airlines' latest fee: You now pay for the privilege of buying a Spirit ticket online. By my count, the airline tried charging this fee twice before -- will the third time be the charm? It would seem so.

OK, but the new wave of a la carte pricing didn't exactly work out the way it was supposed to -- because the global economy didn't work out the way it was supposed to. And for the airlines, the financial mess is the third once-in-a-blue-moon crisis this decade, after the post-9/11 slump, and last year's soaring fuel prices.

And now? People considering flying are on the fence -- unless they can get the deal of the century.

Oh, the airlines aren't jettisoning a la carte pricing -- it's just that now they've added continuous weekly airfare sales, ever since a few days before Halloween 2008. Unfortunately (for the airlines), travelers are now also becoming "conditioned" to expect airfare sales, and they wait until the very last minute to buy. And that drives airlines crazy.

You see, for the airlines, the history of consumer "booking behavior" has been a key tool used in pricing seats and, for the moment, recent history looks more like 1930 than 2009. Not only are business travelers cutting back significantly, but leisure travelers are now conditioned to expect rock-bottom prices before they buy.

Why pay retail? Why, indeed.

Ticket Competition

Meanwhile, the airlines are facing new competition for ticket sales: A couple of large online travel agencies have waived booking fees -- in an attempt to create a more level playing field with the airlines, which typically don't impose such fees (except for Spirit, of course).

So, where are we? In heaven, if you're a passenger -- and flying blind, if you're an airline. What to charge? And when will we hit bottom? Reminds me of the stock market...

A final word of caution for fliers: Many airlines have already said they plan to cut capacity (seats) in the fall -- and some say they'll do this even sooner -- so, assume the brace position for more yo-yo pricing as we move into the typically busy summer air travel months.

But for now, enjoy the deals -- if you thought you couldn't afford to fly, think again. Hey, it's not like you're paying retail.

This work is the opinion of the columnist and in no way reflects the opinion of ABC News.

Rick Seaney is one of the country's leading experts on airfare, giving interviews and analysis to news organizations, including ABC News, The New York Times, The Wall Street Journal, Reuters, The Associated Press and Bloomberg. His Web site FareCompare.com offers consumers free, new-generation software, combined with expert insider tips to find the best airline ticket deal.

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