=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SF Gate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2001/12/21/f= inancial1614EST0248.DTL ---------------------------------------------------------------------- Friday, December 21, 2001 (AP) Airfares drop for ninth consecutive month compared to a year ago BRAD FOSS, AP Business Writer (12-21) 13:45 PST NEW YORK (AP) -- Even as major carriers lose millions of dollars every day, the airline industry is beginning to exhibit signs of a post-Sept. 11 recovery in terms of passenger demand and average domestic ticket prices. The cost of flying 1,000 miles within the United States dropped 16 perce= nt in November to $123.68, the ninth consecutive month in which airfares dropped compared to a year ago, the latest industry data shows. For passengers flying coach, the cost averaged $111.89 and for those flying in business class it was $215.43, according to the Air Transportation Association, the industry trade group for major U.S. airlines. The data collected by the Washington-based industry group is supplied by the country's major carriers, excluding Southwest Airlines. While the health of the industry is abysmal based on annual comparisons, data from the last two months show some hopeful signs. The average cost of domestic flights is beginning to rise, if only slightly, after declining sharply between March and September. Airfares were up 4 percent in November from $119.21 in September, the industry group said late Thursday. Based on that data, Wall Street analysts estimate that industrywide revenues fell by 33 percent in November compared with last year. But year-to-year declines have tapered off: revenue was down 45 percent = in September and 38 percent in October. Salomon Smith Barney analyst Brian Harris predicted December revenues would be down 26-28 percent from a year ago. "I think it's fair to say we are closing the gap compared with last year= ," said John Heimlich, an economist at the Washington-based industry group. "Some of the fire sales will go away as traffic picks up." Heimlich stopped short of predicting that average prices would continue = to rise on a monthly basis. Even though passenger demand has gradually risen from Sept. 11-related depths, "I really don't think there's any pricing strength yet," he said. Heimlich attributed the domestic airfare price increases since September to "seasonality," meaning airlines can get away with charging more around Thanksgiving and other holidays, and that the mix of business travelers -- who pay more -- is typically higher during the fall. Still, the industry is by no means out of trouble. November's passenger traffic was down 20 percent from a year ago -- a slight improvement over October, but still indicative of very hard times. While planes are filling up again, carriers have reduced their carrying capacity by about one-fifth and -- as the latest industry data shows -- tickets are being heavily discounted. Analysts are predicting industrywide losses of between $2 billion and $3 billion in 2002. For example, the nation's two largest carriers, American and United, are losing as much as $15 million a day, said Ray Neidl, ABN Amro's airline analyst. UBS Warburg analyst Samuel Buttrick said demand among leisure travelers improved in the first half of December compared with the first half of November, but that holiday traffic is expected to be down about 15 percent from last year. The biggest question facing the industry, Buttrick said, is "to what extend will business travelers resume full-fare travel next year?" On the Net: www.airlines.org =20 ---------------------------------------------------------------------- Copyright 2001 AP