Airlines have announced price cuts targeting leisure travelers through the usually busy winter holiday season and beyond. Analysts view the moves as an attempt to woo back consumers who are putting off trips in response to the unfolding economic crisis.
Translation: income falls (or is expected to fall or is more uncertain), demand falls creating a surplus and price falls.
The downturn is emerging as the biggest threat to the industry since it was buffeted by summer fuel prices. Now fuel prices are retreating, but so is the demand for seats.
Translation: Don't buy airline stock.
In theory, there should be few empty airline seats. Airlines have eliminated about 200,000 seats per day by zapping routes and grounding planes.
Translation: Supply fell ...
The reduction was supposed to give airlines room to raise fares. But analysts say winter sales suggest that airlines are struggling to fill their planes.
Translation: But demand has fallen even farther ...
And where you have empty seats, you have discounts, says Rick Seaney, chief executive of FareCompare.com, which allows travelers to compare prices among Web sites.
Translation: Creating a surplus which leads to falling prices.
