So far, US airlines have coped well with a painful economic downturn, but a sharp decline in fuel prices soon may lure travelers off planes and into cars for short-haul trips.
That would be a departure from a long-held public perception that flying -- while increasingly expensive -- still makes sense because the cost of driving is almost as bad and driving takes longer.
But with fuel prices down more than 15 percent since July and air fares steady, travelers look likely to rethink that logic, said Rick Seaney, chief executive of air fare researcher FareCompare.
"People are sensitive (to financial concerns) and when they're sensitive, I think they're going to check all their options," Seaney said.
The US Energy Department reported that the average US gasoline price fell this week below USD$3.50 a gallon for the first time since mid-April. That's down from a record high of USD$4.11 a gallon in July, but still up about 25 percent from a year ago.
Major US airlines, however, have initiated 15 successful fare increases or fuel surcharges this year, and none has cut fares significantly even as the price of jet fuel has dropped nearly 40 percent since July, according to FareCompare data.
Airlines also have been aggressively adding new and unpopular fees for items and services like checked baggage that once were complimentary.
For the first time in years, driving is becoming a more appealing options for travelers on shorter trips, experts say.
"I'd be a fool not to say some people will drive," said Terry Trippler, travel expert at TripplerTravel.
"Some of them might look at it for Thanksgiving," he said.
What's less clear is whether airlines would suffer if they lost passengers to cars. The industry is rapidly downsizing, making good on promises issued in the spring to slash capacity on less profitable routes in a bold effort to save money.
As a result of the smaller supply of available seats, planes remain nearly full. American Airlines reported a September load factor of 76.6 percent. United Airlines said its load factor was 79.7 percent in September.
With planes that full, airlines have little incentive to pass any fuel savings along to customers. Carriers lost billions of dollars in the first half of 2008, wiping out the gains of recent years. The main culprit was volatile energy prices.
"You don't whipsaw your business strategy in this environment, and given what we have experienced as an industry over the past year, we are entirely focused on building a profitable and sustainable model that accommodates oil as high as USD$145" per barrel, said US Airways spokeswoman Elise Eberwein.
It is too soon to say that a lower-oil trend is really in place, said Bev Goulet, AMR's treasurer, at a September 18 conference.
"The good news is that the change in oil prices has worked in our favor over this period, but the questions about the steady-state price of fuel and the direction of the economy are as of yet unanswered," she said.
Oil closed near USD$98 a barrel on September 18, compared with a one-year low below USD$78 a barrel reached on Friday.
