Holiday airfares come tumbling down

For the first time in memory, airfares are falling rather than rising as the holiday travel season approaches.

Prices for some domestic flights during the year-end holidays have dropped 25 percent during the past six weeks, according to BestFares.com.

The phenomenon, a byproduct of the deteriorating economy, means many procrastinators are paying less per trip than early birds who locked in pricey tickets months ago when airfares seemed certain to rise in advance of the holidays, as they typically do.

There are some exceptions, however. Airfares remain high to some destinations, including New York, and may have increased during peak travel days: Nov. 30, Dec. 20 and Dec. 26-28, according to BestFares.com.

The spate of holiday bargains comes after financially strapped airlines shrank U.S. operations by about 10 percent this fall, the equivalent of grounding a major airline. Analysts predicted the capacity cuts would keep planes full and prices sky-high for year-end travel.

But carriers are suddenly struggling to fill seats as consumers spooked by market and economic turmoil trim their spending on everything from Christmas gifts to vacations. Analysts say the steep falloff in travel over the past six weeks caught carriers, hotels and car-rental companies off guard.

Airlines are responding with deep discounts. Southwest Airlines last week extended a three-day sale through Dec. 8, with some tickets priced for a mere $90 round trip. United and American Airlines also unveiled sales for travel in December and into the new year.

"Obviously, about the only thing they can do is cut the price for days where they aren't particularly full," said syndicated travel columnist Ed Perkins. "It's the old law of supply and demand working pretty quickly and obviously."

Airlines also may have alienated passengers by ratcheting up rates and pushing through a host of new fees for services that previously were offered free of charge. During the first seven months of the year, carriers attempted 22 price hikes, 15 of which were successful, according to FareCompare.com.

"The airlines made no friends with anybody this summer," said Tom Parsons, chief executive and founder of BestFares.com. "I think a lot of consumers are just frustrated. ... They're going, 'Guess what? Why don't we just drive?' "

Carriers hiked holiday fares in September and early October, thinking their capacity cuts would spur a shortage of airplane seats for Thanksgiving and Christmas, Parsons said. But the move backfired: They priced themselves out of the market for many regular customers.