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Average Airfare Falls to 1998 Levels

In this year's airfare wars, just how low did they go?

The average domestic fare in the second quarter was nearly identical to ticket prices during that period in 1998, according to statistics released Wednesday.

The average fare for a domestic trip from April to June was $301, down 13 percent from a year earlier and the steepest year-over-year dip in nearly 15 years, the Department of Transportation's Bureau of Transportation Statistics reports.

Before this year, the biggest year-over-year drop was between the fourth quarter of 2000 and the fourth quarter of 2001, after the terror attacks of Sept. 11. The average price of a domestic trip slipped 11.8 percent then, the bureau says.

Airfare trackers say that the decline isn't surprising. Since late last year, airlines have repeatedly slashed fares to try to entice cash-strapped travelers who are forgoing vacations and business trips in the midst of a deep recession.

"They thought if they reduced capacity they'd be able to maintain pricing power," George Hobica of Airfarewatchdog.com says of airlines cutting the number of available seats to match reduced passenger demand. "But ... the worsening of the economy surpassed what they could accomplish with capacity cuts. So they found themselves with empty seats."

To fill them, says Rick Seaney, CEO of FareCompare.com, "Airfares were in free fall from November ... and the discounting never stopped."

A drop in the number of business travelers, whose premium-priced tickets could normally make up for some cheaper seats going empty, compelled airlines to chase after vacationers.

"You have to get leisure travelers to fly, and the only way to get them off the couch and onto the computer is to discount," Seaney says.

Fares have started to creep up, however. Last week, Delta introduced a $10 fare increase, with the rest of the big legacy airlines following suit, Seaney says.

In contrast to last year, when there were 15 domestic fare increases, there have only been five this year, he says. All of those have been since mid-June.

He and other airfare trackers say that with the exception of peak travel times around the holidays, when fares traditionally spike, sales will continue through the end of the year. Southwest sparked another round of sales Tuesday.

"I think we'll continue to see discounting," he says, "until we see a comeback of the business traveler."

Among the top 100 airports, Huntsville, Ala., had the highest average domestic fare in the second quarter at $471. Atlantic City had the lowest, at $185, the bureau reported.

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