We keep hearing about doom and gloom in the travel industry – people aren’t flying, but mostly that forward bookings are down. Airlines are cutting flights and offering relaxed restrictions so that people are more comfortable buying travel. We’ve already seen Alaska Airlines come out with bonus elie qualifying miles for travel now.
One of the frequent questions I’m being asked is, if things are so bad in the travel industry why aren’t we seeing more travel deals? I expect that we will, but it makes sense we haven’t yet.
We aren’t seeing lower prices than before for the most part (there have been some deep discount sales – Alaska’s West Coast – Hawaii $99, Southwest’s new Los Angeles – Phoenix and Las Vegas starting at $30). For the most part the cheapest fares we’ve seen consistently are just more available than usual – they haven’t sold out. In other words, good deals are all around us but they’re deals similar to what we’ve seen before. $300 Europe sales aren’t even that common right now, though they exist – as they over the last four years.
- Discounting won’t generate many sales, price isn’t what’s keeping people away. (At some level price matters, a negative price i.e. being paid to travel might get people on the road.)
- Discounts then would reduce revenue from those who must travel.
Shouldn’t Fares Be Cheaper With Empty Planes?
After 9/11 I saw a lot of fares go up even though planes and hotels were empty. The people traveling were the least price sensitive. They had to travel. Why charge them less?
Once we get to the place where people aren’t as afraid, where they’re more willing to travel, we’ll see deals to get everyone back on the road and in the skies.
Gary, maybe we aren’t seeing many discounts right now for *close-in travel*, but I do feel that we’re seeing discounting baked into pricing for future travel. For example, have you been taking a look at TATL J fares during traditional peak summer times (July/Aug)? You can pretty much get RT J on your choice of BA/AF/LX/LH to you-name-it in Europe from the East Coast US for ~$2K. EI has a bunch of destinations sub-$1500 in J and FI <$1K. It is not mistake-fare cheap but the breadth of the availability at that price across time and destinations is way more than anything I've ever seen before.
So my read is that the airlines think that the health issue is going to burn itself out by then and they're encouraging consumers to buy in now along the same lines of reasoning (and shell out some much-needed cash today).
There are definitely lower fares for domestic travel in April and May and end of March for the routes I travel.
I do think that price matters, a lot. If they had some fire sale fares I’d be buying tickets up in bulk and going somewhere every weekend.
Might also have to do with the rush to use fee waivers as a lever. Airlines may be less willing to cut pricing as far as they otherwise might if they think the combination of waivers + low pricing will encourage too much speculative buying.
i’m seeing some domestic routes in April/May with bargain-basement Basic Economy fares, but where Main Cabin has been left at a relatively normal price (i.e., PHL-DEN for $77 BE, $200 MC). these are routes where that gap is not normally as large. this seems to allow AA to go fishing for “brave” leisure travelers without losing revenue from biz travelers w/ corporate policies that allow them to book MC regardless of price difference.
International va domestic? Last minute tickets for a funeral this week. My mom got lhr-JFK in premium economy, for a same day departure for $750 us round trip. For the same dates, I was seening the same price for msy-NYC in coach.
On the plus side, I got a decent hotel in midtown Manhattan for $90/nt.
I think it’s more related to their algorithms. It will take human intervention to adjust them to the new reality.
Gary I care about ya so please take 15 min and watch the start of this very recent (within the last couple days) interview with Michael Osterholm, a highly regarded epidemiologist (you can see his credentials in the show notes) on the Joe Rogan podcast. Tell me what type of travel deals were gonna see after you watch the first 15 minutes. I don’t think you’ll be right and if you are I’m not sure if people will take companies up on those offers when they see what this does to our infrastructure.
Having heard him a lot when living in MN, he is an alarmist, very smart man, but goes to the worst case scenario. If your not in good health or older then 70 or both, your risk is heighten for potential hospitalization or worse (death rate is in the low double digits), others usually get upper respiratory/flu like symptoms and recover. Look at the facts and what the WHO and CDC are saying and don’t panic (12 year supply of TP won’t help you). The media and people like Osterholm are panic mongers. I agree with the return to travel and good deals in another 1 to 2 months. Your more likely to catch the flu and the death rates are within 1/2 % of each other. Be smart, be safe and don’t panic.
@sunviking82 YOUR WORDS — “If your not in good health or older then 70 or both, your risk is heighten for potential hospitalization or worse”
maybe you didn’t check but Americans are in terrible health (45% obesity, compare that to the obesity levels in other countries already affected) and a good portion of lets say IDK those working in government are older. I mean all three of our candidates for president are over 70 so what are you telling me. Americans are overweight, in poor health and our healthcare system is hardly surviving, this is literally crux. 39% of all nurses in the US have kids, so if they cancel schools which many people are moving toward considering, how are those nurses going to work? we also have a huge population of smokers and those who have other medical issues who need beds. It all makes sense and although I feel like I’m in good health, kids our carriers and old people are everywhere. This is going to spread.
Glad you agree with my comment on the AA capacity cut post, Gary. 🙂
As another commenter noted, this should be a fantastic time for the airlines to dump mileage off the books with award sales or at least maxing out award seat availability – especially with widebodies moving domestically. Essentially 9+ until the last 10 seats are sold per flight. I’m sure upgrade lists are shorter now, but that doesn’t reduce liabilities. If the flights are already going to happen – even with reductions and schedule changes – then filling all remaining seats with warm asses should be on the table.
It’s not the virus we should be worried about…
https://youtu.be/c6kHSUTMBRU
Price cuts work, just ask the Fed and rate cuts…
Yes, Williams, it’s going to spread and 97% of people will recover. . .similar to the FLU. I will let you know when it’s safe to come out of your bunker!
just basic economics 101 – demand inelasticity in the current environment.
Fear! It is that simple!