U.S. airline fares in May eight percent below that of 2001

By Lynne Marek
Bloomberg News Service

CHICAGO — U.S. airlines' fares in May were an average 8 percent lower than a year earlier as the carriers kept discounting to try to fill planes after the recession and Sept. 11 terrorist attacks reduced demand.

Revenue for the carriers excluding Southwest Airlines Co. fell 18 percent last month, said the Air Transport Association, a trade group representing AMR Corp.'s American Airlines, UAL Corp.'s United and other major U.S. airlines. Fares declined 9.5 percent on U.S. routes and 3.8 percent on international flights, the group said.

Airlines have been discounting fares since the attacks, which caused a 26 percent drop in traffic in October. Traffic has regained a few points each month since and was down 9 percent in May. The lower fares and traffic have led to expected industry losses of more than $5 billion this year and about $1 billion in 2003, UBS Warburg said in a report today.

"Traffic is just not coming back," said David Swierenga, chief economist at the trade group. "We've been at this sort of plateau level for all of this year, really, and airlines are offering all kinds of discounts to get people on board."

AAA, the biggest U.S. leisure-travel agency, said air travel during Fourth of July will be 4.5 percent lower than in the year-earlier period. AAA surveyed 1,300 people in the United States.

Major carriers began offering Fourth of July fare discounts this week that amount to the first major sale in months, according to Bestfares.com. Another Web site that compiles fares, Orbitz.com, also recently listed discounts through August.

The industry had a net loss last year of $7.7 billion even after about $4 billion in federal aid, according to the Washington-based Air Transport Association.