Friendlier Skies

Airfares are so cheap, bringing a friend is cheaper than an extra bag

If there's a silver lining to the economic woes that have stopped most consumer spending in its tracks, it's this: Spring and summer airfares are amazingly cheap.

Indeed, fares are so cut-rate right now that it could cost more to fly two bags from Chicago to Minneapolis than to transport one person.

The trans-Atlantic airline of premium-economy seats sees stable bookings for the summer season. Dale Moss, Managing Director of OpenSkies talks with Christopher Hinton about the impact of the recession on trans-Atlantic airfare.

A flight during traditional work hours between those two cities was available on American Airlines last week for $88 round-trip. Bring two bags along and you'll pay an extra $100 round-trip.

At $88, that fare calculates roughly to a dirt-cheap 3.3 cents per air mile between Chicago O'Hare and Minneapolis-St. Paul International. Driving -- on land miles, of which there are more -- would cost about 10 cents a mile if gasoline averaged about $2 a gallon.

"These are really wild and crazy prices," said Tom Parsons, chief executive of Bestfares.com, a discount travel site. "When you think that airfares can't get any cheaper, even for no-advance-purchase fares, they do."

Earlier this month, JetBlue offered a one-day-only sale on flights to New York from San Francisco or Los Angeles for a jaw-dropping $14 one way, before taxes. That's far less than cab fare from JFK airport into Manhattan.

A last-minute trip to New York from the West Coast for what amounted to a $49 round-trip price including taxes was unheard of only a few months ago, much less a couple of years ago.

"The deals that we're seeing are pretty incredible right now," said Joel Grus, a "fareologist" with Live Search Farecast, a travel search site. "Some of them that I see make me want to say I'm going on vacation next week."

Cheap Fares, but Empty Wallets

Unfortunately, a growing number of consumers don't have that option. About 5.1 million jobs have been lost since the start of the recession and last month alone some 663,000 people found themselves jobless as the unemployment rate soared to 8.5%. The bottom line, for the airlines: Not enough people are flying for business or pleasure.

The Air Transport Association, an industry trade group, said revenues from passenger flights are on a path of sharp decline. In February, the latest numbers available, passenger revenues dropped 19% compared with the same period a year ago. That was the fourth straight month the industry saw a year-over-year drop.

Domestic and international airfares have been decreasing for many months, but the bargain-basement prices available for travel in late April, May and even into summer -- when prices usually are at their highest -- are a sure sign of desperation for air carriers.

Fare Cuts for U.S. and Abroad

"The airlines are pushing people to travel now and the only way they can get a customer to travel is if [the customer] sees excellent deals," said Altan Arsan, owner of Artun Travel in Chicago.

Airfares are down an average of 9% from this time last year on domestic flights and 19% for international flights, according to the travel site Farecast. But the discounts go even deeper on selected flights.

A flight from San Francisco to Miami anytime from April 22 to April 29 was available last week for $155, according to Farecast. A year ago, that would have cost 45% more at $283.

Overall, flights to Miami are lower by 28% since this time last year; fares to Las Vegas have fallen 12% year over year.

"The problem the airlines are having right now is that everyone is booking closer to the date of departure," Parsons said. People "are afraid they won't have a job to pay for a trip and they're being very cautious about booking things too far out."

Cheaper to Rebook

It used to be that a trip to Europe, for example, would be considerably less if the flights were booked well in advance of the trip, preferably five to six months ahead.

Not anymore. If you bought a trip from Boston to Zurich on Jan. 5, for travel in June, July or August, it would have cost $1,297, according to Parsons. That same ticket purchased on April 7 could be had for $572.

Consumers holding the costlier tickets, Parsons said, should consider rebooking the same flight, eating the $250 change fee and getting a travel voucher ranging from $375 to $473 a ticket, depending on the flights and exact dates. "That's like putting money back in the bank," he says.

What about fall and early winter travel? Should consumers jump on these cheap fares now? "It's certainly possible the deals will get better, but if the economy stays weak the carriers will go ahead and cut capacity and the fares will start moving in the other direction," Farecast's Grus said.

But Parsons doesn't see it that way. "Don't touch fares for November and beyond," he said, adding that it's unlikely capacity cuts could happen that quickly. "I don't see where this economic climate is going to turn around that fast, and those seats need to be sold."

Jennifer Waters is a MarketWatch reporter, based in Chicago.