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CNN Saturday Morning News

How Does Economic Slowdown Affect Airline Ticker Prices?

Aired August 18, 2001 - 09:16   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KYRA PHILLIPS, CNN ANCHOR: Well, the downturn in the economy is hitting the airline industry hard. Midway Airlines filed for reorganization under Chapter 11 bankruptcy this week. It cited the big drop in business traffic experienced by Midway and other airlines.

So how can this overall drop in business travel affect the average consumer? Joining me from New York to talk about that is travel expert Pauline Frommer. Hi, Pauline.

PAULINE FROMMER, FROMMERS.COM: Hi, how are you?

PHILLIPS: Good. Good to see you.

Well, what do you think happened here? What caused this drop in business travel?

FROMMER: Well, the economy isn't doing as well, and corporations are trying to cut corners when they can. And the way to do that is instead of sending executives out of the -- all over the country, they're using the phone more. There's been a sharp decline in business travel. Midway itself said that they saw a 90 percent drop from their hub, Raleigh-Durham, in June, and that put them over the edge.

PHILLIPS: You think there will be some more airlines kind of going belly-up? Do you foresee that?

FROMMER: I hope not. At this point, I don't know of any who are on the brink. But it could happen, who knows? All of the airlines, with the exception of Continental and Southwest and Jet Blue, have been posting losses, and major ones.

PHILLIPS: Well, on the positive note for the consumer, this drop in business travel, you actually can get pretty good bargains out there, right?

FROMMER: Yes. It's been a remarkable year for leisure travelers. We have been seeing sale after sale after sale from the airlines. What consumers don't see as much is that the airlines are giving even bigger discounts to the ticket consolidators, the ticket discounters.

For example, I just flew from New York to Chicago round trip. I did a search on one or of -- both search engines, I think it was Fairchase.com, and came up with a low fare of $160. I went to Priceline, bid 40 percent under that, I bid $100, and I got it. You're going to pay a little more than that on the train round trip between New York and Chicago. And I got a direct flight on American Airlines for $100.

So the prices you can get are just amazing right now.

PHILLIPS: Wow. Well, where are some of the best cities to go to right now in the United States? You gave a couple of examples of where you went. What are some other bargains right now?

FROMMER: Well, right now, Las Vegas is a bargain, because it's so incredibly hot. This is especially if you can travel midweek. And there's been an insane housing boom in Las Vegas with hundreds of new hotels being built. If you stay at the older hotels, or if you bid at a consolidator such as Priceline, you can get (UNINTELLIGIBLE) rooms for as little as $39 a night there.

New Orleans, again because it's hot, is a very good deal right now.

PHILLIPS: What about Europe?

FROMMER: Europe is an amazing deal right now. We hit our peak in terms of exchange rates in July, and there has been a slight dip. But for the most part, we're seeing a stronger dollar than we have in about 25 years. For example, if you go to Britain you'll get about $1.38 to the pound. Two years ago, it was $2. If you go to Turkey, you're going to get one million Turkish lire to the dollar. A year ago, it was 500,000. That buys a lot of rugs, as well as good hotel rooms, great meals. There's never been a better time to visit Europe.

There are packagers who are packaging Europe for insane prices this winter. There's a Web-only company called Gotoday.com which is selling London, six nights hotel and air from New York City, for $399.

PHILLIPS: Wow. Oh, my gosh.

FROMMER: Isn't that incredible?

PHILLIPS: Pauline Frommer, I am going to book my vacation as soon as we wrap up. Thank you so much...

FROMMER: OK.

PHILLIPS: ... for being with us this morning.

FROMMER: Sure, thank you.

PHILLIPS: All right.

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