Our friends at SkyTalk and AirlineBiz note today that J.P. Morgan is “throwing water” on an announcement we made that leisure travelers have gotten a break this week from sky high ticket prices around the holidays.
Their research note entitled “Holiday Prices Move Higher” and cites:
- AirTran raised its 7 day advance purchase fares by $5-$15 one-way … widely matched by competitors — equating leisure travelers who had been getting quotes in the $400-$600 roundtrip range for holiday travel in the past month; who are now getting quotes for $200-$400 roundtrip for those same trips — with procrastinators and business travelers who buy 7 day advance purchase airfare on AirTran routes (and it’s competitors) has me scratching my head.
I pulled the data from our historical database on AirTran’s Atlanta hub for longer trips (1200 miles or more roundtrip — about 25 destination cities with filed airfare) and put together a sheet with the daily average cheapest 7 day advance price for the month of October 2007 and 2008.
The data doesn’t support the premise that AirTran 7 day advance prices are higher (for the holidays) as cited, rather the contrary. October 2008 is highly volatile and overall lower for 7 day advance fares compared to the same month last year — 10 days in October 2008 were over 40 percent lower than 2007 (airfare sales) — AirTran is notorious for weekly quick in and out “airfare specials” (as clearly evident in the graphic below).
Also shown is an example of AirTran out-the-door ticket prices for a 7 night non-stop roundtrip departing each day in November from Atlanta to Detroit — looks like a pretty good deal to me for Thanksgiving travel (8-Nov-2008 is the 7 day advance purchase price breakpoint; Northwest and Delta have similar pricing in the month for their non-stops).
- You’ll be paying for that suitcase – yes airline fees both new and increased add a wrinkle to the total cost of a trip this year (and likely for many years to come). Consumers should be very aware of these non-ticket charges and prepare accordingly.
- Sales not earlier this year – I checked our historical databases each year from 2004 on and “JOY” Northwest fares did not become the cheapest in the marketplace on until Mid-November mainly because Northwest files a ton of very cheap “K” fares (I call them “Crazy Ivan” fares) that are typically super cheap, good only on Tue/Wed and only blacked out on peak holiday travel days — leaving other off-peak days around the holiday cheaper (with limited inventory).
- Holiday Prices Broadly Higher – we have documented in excruciating detail the run up of 21 attempted airfare hikes this year and the minimalistic pull back in fuel surcharges since oil has dropped in the last 3 months (by over $80 dollars a barrel!).
The disproportionate amount of higher prices this year are being levied on business travelers via a combination of higher fuel surcharges and onerous minimum stay requirements. Small cities with little competition are also bearing the brunt of hefty increases because there is less competition to drive down system wide airfare hikes.
This holiday season is about getting a “better bad deal” - the holiday airfare sale we highlighted is “significant” — to be honest I was worried in early July that airlines would not file holiday sales after announcing unprecedented seat cutbacks (see the scope of the domestic holiday travel price breaks in this graph using our proprietary software). Recent trends in international ticket prices are also down — highlighting both seasonal and economic softness. These down trends provide a welcome respite from this year’s march to ever higher ticket prices — air travelers actually have a much better shot at visiting family and friends over the holidays today than they did just a few short weeks ago.
Our release (portions of which were used by AP in its article that evidently caused this stir) simply noted the “largest volume of sale activity of the year” — a pleasant surprise. It was not an analysis of price trends in 2008 which have been covered in several other articles as recently as the end of September — where we noted that airfares where up from 20 to 40 percent (metros vs. small cities).
Nonetheless, it isn’t just me that is seemingly “out of touch” with holiday prices – take our friends at Farecast who have excellent airfare technology:
In a blog post four weeks ago on 6-Oct-08 Farecast notes that Thanksgiving tickets were up 25% compared to the same time last year — But in an article in the Boston Globe filed tonight, Farecast updates with Boston specific information (apparently even before holiday sales kicked in this week):
“That could explain why the average prices for Thanksgiving fares have dipped since Sept. 26 and Christmas fares since Oct. 20. “Now prices are close to the level they were at the same time in 2007,” said Dave Hsu, an airfare analyst at Farecast.
And further notes that nationally that holiday prices are now 13 to 14 percent higher — down by nearly half in the past 14 days since their Oct. 6 update.
So is it “Holiday Prices Move Higher” as suggested by J.P. Morgan or a “Pretty Decent Holiday Deal” given the current environment?
You make the call!
I’m heading on a plane for the holidays for a decent price; I hope you do as well.