The writing has been on the wall for the U.S. airlines industry. With the economic recession still denting American consumers’ pocketbooks, there is only one way for airlines to keep their flights full—cut ticket prices.
Last month, two percent fewer passengers traveled on U.S. airlines compared to last year. That’s a little better than the five percent drop in August.
But looking beyond headcount, the story gets bleaker for airlines.
The Air Transport Association (ATA) said that the average airplane ticket price in the United States fell 18 percent in September, the 10th consecutive monthly decline in average ticket prices.
Prices declined even more for international travel, where travelers paid about 20 percent less on flights to Asia, Europe, and South America. The ATA also said that travelers are looking harder for deals and becoming less loyal to frequent flyer mile programs.
While other companies have already started seeing better days, airlines are still feeling the pinch. For consumers, travel and vacationing is often the first expense to be cut, and one of the last ones to return after a period of financial difficulties.
"The demand for air travel remains weak, as evidenced by the untenable pricing environment,” said ATA President James May in a statement.
“While other sectors may be seeing signs that the economy is getting back on track, the airline industry has faced challenges in its effort to generate revenue,” he continued.
Annually, commercial aviation contributes $1.1 trillion in U.S. economic activity and supports more than 10 million jobs.
Analysts believe that until the business travel market improves, airlines will continue to see weak earnings.
JetBlue Cuts Prices
JetBlue is known for price cutting, but its latest announced promotion will likely book its flights full. The company announced a “No Trick—All Treat” Halloween sale.
All nonstop U.S. flights departing after noon will be priced at $31 each way on Oct. 31. Unfortunately, most popular flights are already sold out.