Cheap air fares will stick around

Add one more item to the list of sure things that includes death and taxes: cheap airline seats.

U.S. travelers are projected to enjoy another year of low air fares in 2005 as fierce competition is forcing airlines to maintain steep discounts that have dominated the industry in recent years. Passengers, on average, are paying less to fly than they did in 1988, according to the Air Transport Association, an airline industry group in Washington, and analysts don't see prices going up as low-fare carriers keep the pressure on traditional carriers.

Tuesday, for example, low-fare airline JetBlue Airways, founded and led by Utah native David Neeleman, launched a sale that offers fares from Boston to Florida cities starting at $55 each way, or $110 round trip. American Airlines is already offering sale fares as low as $138 round trip to Florida cities.

This cutthroat competition has meant that more people than ever are flying, but airlines, unable to pass along record jet fuel costs, are losing billions of dollars. The Air Transport Association estimates that holiday air travel hit a record 37.9 million passengers this year, up nearly 6 percent from 2003, but the industry is expected to lose as much as $8 billion in 2004.

That would bring the industry's losses to $30 billion since 2001, when the terrorist attacks sent air travel plummeting.

As a result, airlines are in a squeeze that analysts say contributed to the disruption of US Airways flights out of Philadelphia as large numbers of baggage handlers called in sick over the holiday weekend. Robert Mann, an industry consultant in Port Washington, N.Y., said traditional carriers like US Airways are slicing costs through layoffs and cutting wages and benefits at the same time they are packing planes, leading to disgruntled employees and poor services.

"The US Air issue illustrates how frustrated these employees are getting," Mann said.

US Airways, which had its problems compounded by snowstorms in the Northeast, said in a statement that it expected to resume normal service Monday, except for a handful of weather-related disruptions. The company, which is trying to reorganize under Chapter 11 bankruptcy protection for the second time in two years, said it recognized that its efforts to straighten out the weekend's fiasco are "no substitute for our usually good record of delivering passengers and their bags to their destinations in a timely way."