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Cheap tickets still exist, despite airfare inflation

by Tom Johansmeyer (RSS feed) on Dec 9th 2010 at 1:00PM

Is it really getting more expensive to fly? Earlier this week, the Department of Transportation revealed that ticket prices were up 13.1 percent year over year for the second quarter of 2010, a stunning increase – though tempered by the fact that fares actually fell 13 percent year over year from the second quarter of 2008 to the second quarter of 2009. If nothing else, this does raise concerns about whether we won't have access to cheap tickets for a while.

With some strength coming back to the travel market, it's easy to speculate that rates will continue to rise, especially if business travelers come back into airports in force. And when you look at the history of airfares over the past decade and a half, it's easy to see why. Despite grumblings in the industry that flying is getting cheaper, average fares have climbed 14.8 percent cumulatively from 1995 to 2010, with 2010's average domestic fare of $341 approaching the 2008 peak for this period of $346.

But, there's a silver lining. There's still enough market inefficiency to make deals possible, and the rising strength of intermediaries (i.e., online travel agencies) means that you should be able to score some great fares next year. As the battle for brand recognition as a way to access consumer wallets heats up, look for competition to put some pressure on the economic drivers that push fares higher.

I've heard from Bill Miller, Sr. VP of Strategic Partnerships at CheapOair that average ticket price (base fare only) fell 0.3 percent year over year for domestic flights and climbed 0.2 percent year over year for international flights. Effectively, this translates to no change while the underlying carriers are pushing fares higher.

Miller tells me, "At CheapoAir we work hard to keep airfare prices low for our customers. Year-over-year, airline ticket prices that customers buy from us have actually decreased very slightly. And, our international airfare prices have gone up very slightly. We will continue to focus on finding low airfares for our customers as that is what is important to them."

So, while fares are still at close to their highest levels since 1995, it doesn't mean there's reason to give up hope. Combine the fact that you can still find bargains with the increase in purchasing power that accompanies an economic recovery, and you're in better shape than you think.

Time to get out on the road!

[photo by AMagill via Flickr]

Filed under: North America, United States, Airlines