Thanksgiving Airline Ticket Sales?

Oct. 15, 2008 — -- What a dilemma -- to buy or not to buy a holiday airline ticket.

It shouldn't be so hard: After all, oil is down, so ticket prices are lower, right? Oh, wait, ticket prices are not lower.

But they could be. The thing is, it's been a crazy year. Anything can happen, and it's not over yet.

Look at what we've seen so far: Passengers have endured a torrid pace of airfare hike attempts in the first half of the year -- 21 in all. But then you have to contrast these hikes with the free-falling price of oil over the past three months -- from just under $150 per barrel to $80 per barrel.

Meanwhile, those pesky fuel surcharges imposed by U.S. domestic airlines haven't budged from their highs for travel within the U.S., and international fuel surcharges are just this week starting to slowly retreat:

$170 roundtrip surcharges for many domestic U.S. tickets

$336 roundtrip average fuel surcharge for trans-Atlantic tickets

$391 roundtrip average fuel surcharge for trans-Pacific tickets

And, just in case you hadn't noticed, the airlines now find that they've traded an oil crisis for a financial crisis. The difference? People flew during the oil crisis while more and more are sitting out this latest disaster.

In the meantime, fuel surcharges have turned into a bit of a PR disaster for the airlines as lower energy prices have not corresponded to lower ticket prices.

Now, interestingly, several international airlines are beating the PR pants off their U.S. counterparts simply by lowering their fuel surcharges.

Why are U.S. airlines only following suit on competitive international markets at this point?

Well, to hear American Airlines CEO Gerard J. Arpey tell it, we're supposed to be looking at the fabled "big picture" -- a picture that includes the not-so-distant days when the price of oil was killing the carriers.

"Even when airlines were posting profits, they lagged behind other companies in return on investment," Arpey said.

OK, so it's "make that hay while the sun shines" time -- yes, we get it.

Finding Affordable Flights

On the other hand, much of this hay-making strategy seems to be all about cutting capacity: Our estimates at FareCompare.com show more than 200,000 fewer seats daily by the end of the year and 70 million fewer seats for all of next year. Is it working?

So far, so good: Flight cutbacks have kept pace with the withering demand. Take, for example, the typically slow air travel month of September: JetBlue had an eye-popping 28 percent increase in revenue per seat-mile. Fewer seats (11.5 percent) kept pace with fewer passengers (4.8 percent), which, in turn, kept flights packed and that gave JetBlue the pricing power required to keep airline tickets high.

But what about a backlash?

Face it, with this financial crisis, we've been seeing more and more travelers on the sidelines: About 10 percent more stayed home last month compared to September a year ago. And this week, an analyst with Credit Suisse noted that corporate bookings were down 10 percent to 20 percent and were expected to stay that way.

So, this could signal another potential disaster for the airlines, particularly the legacy carriers: losing a significant chunk of the ultra-lucrative business traveler sector, a sector that pays up to five times more for a ticket than leisure travelers do.

Luckily, history is on the airlines' side when it comes to recessions (1991) and crises (Sept. 11, 2001). If you remember your history, there was never a complete collapse in demand during these periods. And besides, the airlines today have new streams of revenue outside of the ticket sales -- yes, I am talking, in part, about those annoying (but oh-so-lucrative) baggage fees.

So, where does this leave the folks who are still taking planes? Look around and you'll see them digging through their kitchen junk drawers for calculators to help them answer the question: fly or drive?

And you can bet they'll be looking over the numbers especially closely when it comes to the upcoming holiday travel season, as the price of gasoline is dropping without a corresponding drop in airline ticket prices.

Holiday Airfare Surprises

But there is good news for travelers: did you know that European travel, even with the current hefty fuel surcharges, is still a relative bargain? And it's looking better every day as the dollar gains strength against the Euro and the British pound. And try this on for size: Ryanair, the low-cost airline ticket king of Europe, is threatening to put on $20 each-way flights over the pond within a few years.

And you know what? When it comes to airline ticket prices, all it takes is one falling domino, and watch for an avalanche of airfare sales or significant decreases in fuel surcharges.

I am already seeing signs of discounting around Thanksgiving in select markets. As the financial turmoil unfolds, you might want to check the price of that trip you thought was out of your budget. You may get an unexpected holiday surprise.

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.