Lower Fares Drag Down Agency Sales In October

The Airlines Reporting Corp. said travel agency sales of airline tickets dropped nearly 6% in October compared to the same month last year, for a total of $6.9 billion.

The decrease was a reflection of the 6.17% decrease in domestic fares and the 5.79% drop in international fares. Total sales were down 4.09% for the year to date, on a 4.6% decrease in total fares.

Transactions, however, continue to rise in October, although the pace slowed. Credit card transactions increased 3.42%, to 12.06 million, while cash transactions, which have been on a upward trajectory for much of the year, soared 16.07%, to 1.7 million. 

Total transactions were up 4.85%, to 13.8 million, in October. For the year to date, transactions were up 5.26%.

In addition to the fare fluctuations, Gordon Wilson, Travelport’s chief executive officer, cited the “Election Effect” –a slowdown in travel around the time of a U.S. presidential election. “I don’t know why it happens,” he said. “But it happens every four years.” 

FareCompare, which tracks air fare activity, provided examples of the way in which air fares are heading. In its annual analysis of Thanksgiving travel, it found that fares in 17 of the top 25 U.S. cities are lower than they were last year. Price drops of 8% to 15% were found in Minneapolis, Cleveland, Chicago, Boston and Indianapolis. The decreases were not across the board, however. Thanksgiving fares are up 11% in Philadelphia and 6% in Houston. 

U.S. consumers and some politicians complain that air fares are “all-time highs.” The numbers, however, say they are wrong. 

FareCompare said the airlines have tried to raise fares 16 times so far this year. The latest attempt, initiated by American Airlines, was declared a partial success/partial failure on Nov. 8 after Southwest began rolling back leisure fares. Most of the other attempts, even those with hikes of $2 to $7, failed.