Report: Airfares likely to stay low

By Trebor Banstetter
Knight Ridder Newspapers

The cheap fares that have devastated the major airlines are unlikely to rise anytime soon, analysts said yesterday — a trend that could mean continued struggles for the troubled industry.

Bargain-basement airfares have hurt the big carriers far more than the drop in passenger traffic in recent years, according to a new analysis of airline ticketing data. The data were compiled by Sabre Airline Solutions, the consulting arm of Sabre Holdings, an airline ticket-distribution company based in Southlake, Texas, that processes 50 percent of airline industry bookings.

Industry observers pay close attention to the group's findings because it has access to Sabre's booking data.

Intense competition from discount carriers like Southwest and AirTran is likely to keep the lid on fares for the foreseeable future, said Steve Hendrickson, Sabre Airline Solutions' vice president of consulting.

"We have a lot of (airlines) selling their seats below cost," Hendrickson said during a briefing with reporters and analysts yesterday.

The decline in overall passenger traffic accounts for just about one-third of the drop in revenue among the big carriers, Hendrickson said.

The majority of the shortfall has been caused by low airfares, which have fallen to the cheapest levels in decades.

The major carriers have launched special deals in recent weeks to try to lure travelers to buy more expensive business fares.

American, Delta and other large airlines are offering a free flight for every three business fares purchased. United Airlines yesterday unveiled a promotion that would give a free international ticket to anyone who bought a first-class or business-class international ticket between now and Sept. 14.