Money and Main Street

Fly the dirt-cheap skies

Airlines are offering more discounts in attempt to offset plunging demand and sales.

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By Aaron Smith, CNNMoney.com staff writer

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NEW YORK (CNNMoney.com) -- Now is the time to fly cheap.

Fares hit the roof last year as fuel prices skyrocketed. But this year, fuel costs plunged and passenger demand dropped in a recessionary economy, so now carriers are rolling out cheap fares to fill planes.

Tom Parsons, Chief Executive of air fare comparison site Bestfares.com calls the discounts "distress airfare sales."

"Right now, the airlines have to cater to the people who want to fly cheap, which is their worst nightmare," he said.

The Air Transport Association of America, the industry trade group, said the average domestic fare for major U.S.-based airlines dropped 15% in February, compared with June, 2008, when fares hit a seven-year peak in tandem with record-high fuel prices.

But the lower prices haven't bolstered business. On Friday, the ATA said revenue from domestic and international passengers plunged 19% in February, compared with the same month in 2008.

"The sharp decline in spending by passengers and shippers demonstrates how the global recession is taking an increasing toll on the traveling public," said ATA chief economist John Heimlich, in a prepared statement.

This recessionary trend has been going on since last year. On Thursday, the Commerce Department said that travel and tourism prices fell 16% in the fourth quarter of 2008. Spending on travel and tourism dropped even more sharply, by 22%, during that same period, demonstrating that many Americans are unwilling or unable to take advantage of declining prices.

The deals

Southwest Airlines (LUV, Fortune 500), a discount carrier, is among the most aggressive in offering low-cost flights. Last week, the domestic airline launched a round of deals between cities all over America, including $39 one-way flights (not including taxes and fees) connecting Houston to other Texas cities like San Antonio and Austin, as well as other connections, like Oklahoma City to Jacksonville, Fla. Southwest also offers connecting major hubs, like $49 for a one-way flight between Chicago and Detroit.

"We've said, in our last earnings, that we are seeing a softer travel demand," said Southwest spokeswoman Brandy King. "In order to stimulate that and get more people on board, we are offering these great deals to get out of town."

There are certain restrictions, like the 21-day advance purchase requirement, with no flying on relatively high demand days like Friday and Sunday.

In an even more direct sign of the times, discount airline JetBlue is offering a "promise program," providing a full refund to any passenger suffering an involuntary job loss prior to their trip. On Tuesday, the airline said it was expanding the program to include its "getaways" vacation packages. The refund applies to flights booked between Feb. 1 and June 1, 2008.

JetBlue (JBLU) is also offering a "buy two, get one free" deal for flights between Boston and the West Coast.

Not just discounters

Legacy carriers have also gotten in on the act. US Airways (LCC, Fortune 500) is offering three-day sales of $39 one-way flights between Las Vegas and Los Angeles or Orange County, and $59 fares from Chicago to Fort Lauderdale, Fla.

Delta Air Lines (DAL, Fortune 500) is offering $39 one-way flights between Chicago and Minneapolis, and between Atlanta and Charlotte, N.C., or Charleston, S.C.

"This is probably a once-in-a-lifetime opportunity to buy tickets for air travel," said Rick Seaney, Chief Executive of Farecompare.com, noting that lower fuel prices have helped the airlines survive despite plunging demand from the recession.

"The craziest [deals] are coast-to-coast," said Seaney. "The Holy Grail of air travel is $99 coast-to-coast, and we've seen lots of deals for $99 or less."

The best deals of all

Seaney said that flexibility is key for thrifty air travelers. Those willing to travel on off-peak days like Tuesday and Wednesday have the best chance of finding the best deals, and those willing to incorporate travel packages will find the greatest deals of all.

"This is the first time ever that I've had two [hotel] nights free and a $200 gift card," said Seaney, who had just gotten back to Dallas from a family trip to Walt Disney World in Orlando, Fla. "It's the cheapest experience I've ever had at Disney."

Some of the greatest deals are for overseas travel, said Parsons of Bestfares.com, especially for transatlantic trips to Ireland, which has some of the lowest fuel surcharges in Europe. Parsons said he found $315 round-trip air fares between New York City and Dublin for April and May, including all taxes and fees, as well as a $390 flight connecting Dublin to San Francisco.

"This exceeds my expectations," said Parsons. "The leisure traveler and the business traveler are sitting in the pilot seat." To top of page

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