Airfares Drop in West

Latest AmEx study finds a dramatic drop in city-pair fares

By: Jerry Chandler

Like real estate values, airfares are dependent on three variables: location, location, and... location. And from the perspective of many western travel agents, the location is right.

According to the latest statistic from the American Express Domestic Airfare Index, on a nationwide basis, airfares have either decreased of late, or risen only marginally. In most major western cities, they’re down.

Comparing December 2001 to December 2002, looking at 215 key domestic city pairs, AmEx said the average one-way Full Coach fare declined 2 percent, falling from $685 to $669. The Typical Business fare fell an even more precipitous 5 percent, from $580 to $553. Interestingly, the Lowest Discount tariff actually rose by 3 percent, increasing from $100 in December 2001 to $103 in December 2002. The last category AmEx tracks, Average Fare Paid, fell 5 percent over the same period, declining from $293 to $279.

A look at four major western cities sheds some light on the forces behind the statistics.

In Austin, AmEx found that the Lowest Discount Fare dropped 8 percent, from $79 to $72, but fliers are having trouble accessing those fares.

Yield Management

While fares may be lower, “what seems strange is the yield management the availability of discount fares,” said Jeff Andresen, corporate manager of Century Travel in Austin. “They’re harder to get than they used to be, especially the Austin-Dallas, or the Austin-Houston fares.”

That means some business customers could be driven to take Typical Business fares. And in the Heart of Texas, they’re up way up. In December 2001, the Typical Business Fare was $212. In December 2002, the price was $243, a 14 percent jump.

Andresen said most of his clients tend to be consultants. That means they’re staying over weekends, which makes them eligible to “use more of the vacation fares.”

Downstate, in Houston, Lowest Discount Fares were off 6 percent, falling from $88 to $82. Typical Business fares were down too, dropping 7 percent from $427 to $399.

Saved by Southwest

Susan DeGroot attributes both declines to Southwest Airlines, which has a major presence at Houston Hobby Airport. “Southwest is skewing that,” said the lead corporate agent for the Bayou City’s Woodlake Travel. “In the Houston market, we thank them for keeping fares low.”

DeGroot said agents should be wary this year about the blitz of new discounted business fares from the likes of American and United. “If you don’t watch it,” she cautioned, “you could be selling your client a non-refundable. Things are getting more complicated.”

Complicated or not, these new business fares appear to be gaining traction. Phoenix-based America West was the first of the majors to radically revamp its business fares. Results are dramatic.

AmEx indicated the Typical Business fare out of Phoenix Sky Harbor International Airport fell a full 22 percent from December 2001 to December 2002 from $387 to $302. Indeed, the Average Fare Paid was off almost a third (28 percent to be precise). What was $206 at the end of 2001, tumbled to $148 at the close of 2002.

Out of Los Angeles, the Typical Business Fare slid 4 percent, from $675 to $649. The decrease in the Lowest Discount Fare was even more pronounced. It fell 15 percent, from $121 to $103.

AmEx’s numbers “kind of” correspond with what Judy Franzblau is seeing in her shop. “The airfares are just so volatile,” said the travel consultant with Baldwin Travel in Los Angeles. “It’s a matter of hitting them at the right time. I just re-ticketed a whole bunch of people, because the fare went way down between last week and this week.”

Ridiculous Fares

Despite recent fare decreases, Franzblau said her clients still think business airfares “are ridiculous. Absolutely ridiculous.” The upshot: more of her customers, like those of Jeff Andresen’s in Austin, “are buying non-refundable tickets...Even if they have to eat the ticket, they figure it was worth it.”

And an increasing number of her travelers are using consolidators to reap even larger discounts. No longer the sole province of leisure travelers, Franzblau said business travelers have discovered this heretofore unknown tier. “This is where the big change is,” she said. “No longer are companies allowing $2,200 [roundtrip] fares.”