In the August 20, 2009 story "Fall airfare sales cutting deeper than usual," Associated Press writer Joshua Freed talks about airlines cutting airfares. Is this change in the price of air travel caused by (a) an increase in the supply of air travel, (b) a decrease in the supply of air travel, (c) an increase in the demand for air travel, or (d) a decrease in the demand for air travel? Read the article and then illustrate this price change with a graph that shows the initial positions of the supply and demand for air travel and the new positions of the supply and demand curves. (Hint: Only one of the curves has shifted.) There is a link at the bottom of this posting that provides the answer.
MINNEAPOLIS – Airlines are cutting fares deeper than usual this fall in an effort to fill seats.
American and Southwest both launched fare sales this week, and United is running several sales, too.
While it's common for airlines to use discounts to fill planes during the slower fall travel months, the discounts this year are deeper and more widely available than last fall, said FareCompare.com CEO Rick Seaney.
"The prices we're seeing now are just absolutely superb" compared with this time last year, he said. They're still a little above the fares airlines were offering over the winter and spring when demand was in a free-fall, he said.
Business travelers, the most profitable for airlines, have been staying home for months as companies cut travel back to only the most essential flying. Steep discounts kept leisure travelers in the air through the summer, though at prices that often don't cover the cost of the flight. Still, airlines are better off flying at a loss than parking the plane and incurring what would often be an even bigger loss.
Cheap seats are easier to get under some of the sales than others.
The sale by Southwest Airlines Co. applies to flights from Sept. 9 through Jan. 7, but sale fares aren't available on Fridays or Sundays. And it blacked-out flights around Thanksgiving — Nov. 24 through Dec. 1 — and near Christmas and New Year's Day — Dec. 18 through Jan. 4. Tickets must be purchased by Sept. 3. Some seats are as cheap as $59 each way plus taxes.
UAL Corp.'s United, meanwhile, is running several sales, with fares for travel between Chicago and Houston for $102 each way, and travel between Atlanta and Denver for $109 each way. Tickets have to be purchased by Tuesday for travel by Dec. 16.
Another sale covered Washington Dulles to several East Coast cities for travel through Nov. 18. Tickets must be purchased by Friday. Both sales are valid only for travel on Tuesday, Wednesday, or Saturday.
The sale by AMR Corp.'s American covered flights between New York and five other cities: Miami, Chicago, Dallas-Fort Worth, San Francisco, and Los Angeles.
The New York to California flights were $109 each way, a number that caught Seaney's eye. It's close to the $99 each-way fare for coast-to-coast travel that fliers watch for but seldom get, he said.
Also, some carriers are undercutting each others' direct flights with one-stop flights to the same cities.
"There's a lot of really low-ball deals out there if you're willing to put up with connecting," he said.
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Great take on supply and demand.
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