Monday, July 13, 2009

What Does Huge Response to Last Week's Southwest Fare Sale Tell Us?

Not much, actually, except that there is a certain amount of pent-up air-travel demand that can be primed with really, really cheap fares.

That snap two-day Southwest fare sale last week -- with one-way fares from $30 to $90 to all Southwest destinations -- generated so much response that Southwest's Web site went down for hours, aggravating a lot of potential customers.

Overall, though, airlines continue struggling to generate cash and fill seats as demand refuses to rise. Airlines say they think the demand-revenue crisis has "bottomed out," though with no sign yet that improvement is at hand. As I keep saying, "bottomed out" also describes the condition of the Titanic.

In his weekly post today, Mike Boyd thinks that the analysts predicting that one major airline could go bust by winter (United is the usual suspect they mention) are missing a point: The uncommon agility airlines have in cutting capacity and parking planes -- an agility Boyd thinks they'll exercise more aggressively by November, now that it's clear demand isn't moving through the summer and well into the fall. Without a doubt, sharper capacity cuts lay ahead.

As I also keep saying, plan ahead for a smaller air-travel system with even fewer choices and options. And that condition may prevail for a very long time.

PS -- Re the lag in my posting for the last few days. I was in a Latin American rain forest, this time voluntarily. (Costa Rica, a delightful place. More on that later).


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