US carriers extend sales to combat sagging demand

By David Field

Further evidences that the US airlines face weakening demand, if any were needed, comes as Southwest Airlines quietly launched its fifth fare sale of 2009, and its first this year to include its Florida destinations.

Rick Seany, who watches fares for farecompare.com, says the Southwest promotion is "most unusual" because of the offer's geographic spread and, "these are 'Click n' Save' specials that are usually reserved for targeted cities, but in this case, they are being used to roll out a system-wide sale". This sale lasts through late June, which implies that Southwest is seeing weak bookings well into the start of the normally strong travel season.

While the Southwest sale lasts well into the beginning of a typically stronger period in the US, AirTran began a separate promotion Tuesday that covers an even longer window: it is for travel up to 5 November.

The Southwest promotion comes as the major US airlines saw their January yields sag. The Air Transport Association reported that domestic yields fell about 4%, year over year, in January. While Atlantic yields, long a source of stability, dropped by 6% in the month. The Airlines Reporting Corp., which clears bank settlements for most US airline ticket sales, says its January volume plummeted by almost 27%, with domestic transactions dropping by 20%.

The decline comes despite the deepening capacity cuts that the US carriers are imposing on themselves. Capacity at American Airlines in January was down by 8%, while Southwest cut its capacity by 4.4%, on an annual basis.