Airfares May Be Leveling Off

The Associated Press (AP) reports that airfares, which have declined steadily this year, may finally be leveling off. According to the AP, Travelocity says prices on July 15 were running 15.3 percent lower than a year ago, but by September 15, fares were down only 14 percent. This suggests the airfare free fall has finally bottomed out.

But it also shows that fares are still considerably cheaper than they were a year ago. For now.

“Are price points going up? Yeah. I think the lower price points are,” Tom Parsons, of Bestfares.com, tells the AP. He cites several airlines, including JetBlue and Southwest, which are trying to push fares up even as they continue offering sales.

And the truth of the matter is that once fares level off, the next logical place to go is up. Capacity cuts have drastically reduced the number of available flights, thus evening out the balance between supply and demand. As the economy creeps out of the abyss and more and more people begin flying again, there’s a good chance demand will start to outpace supply. And that means fares should climb.

When that happens is anyone’s guess. My sense is that if fares really are leveling off, they’ll stay that way through the winter, which is generally slow regardless of the economic climate. But when travel picks up again in the spring, we may see fares pick up as well, depending on how many people take to the skies.

For now, fares are still low, and should remain so for the foreseeable future (holidays aside). But like all things, this too shall end. So don’t say you weren’t warned!