Airline ticket sales through travel agencies dropped 25% in January versus the previous January, an astounding drop considering December saw only a 7% fall off versus the prior year.  Travel agency sales, which represent roughly half of airline ticket sales in total, are a leading indicator since most of those sales are for flights in future months.  That is bad, as you might have surmised by now.

Yes, airlines have taken capacity out of the market versus last year, and there’s been a bit of shift away from travel agencies toward direct sales over the past year, but not nearly enough to make up for that difference.  Airlines basically have two options:  take more capacity out of the market or lower fares.  The airlines have already taken out a bunch of capacity, and there’ll be more tweaking.  They are extremely reluctant to lower fares beyond the very low prices we’re seeing now (I can fly round trip from NYC to LA for less than $250 with less than a week advance purchase).  I expect we’ll see these lower fares available without advance purchase restrictions, as businesses re-evaluate every travel dollar.

Most airlines have said they can be profitable in 2009, but I think everyone is surprised by the severity of the sales drop in January.  On a plus note, it’s incredibly cheap to fly just about anywhere right now.

The OTR is taking a bit of a break and heading off to Cartagena for a few days.  We’ll be back rested and ready to go on Monday, February 3.  Have a great week

JetBlue announced that it will launch nonstop service from Orlando to San Jose, Costa Rica, on March 26th, with fares starting at $99 each way.

JetBlue has built a focus city in Orlando, with nonstop service to 22 cities, with a growing number of cities in Latin America, including Santo Domingo, Dominican Republic; Cancun; Bogota, Colombia; and 3 cities in Puerto Rico.

Wait…that sorta sounds familiar…Florida hub with cheap flights to Latin America…oh right, yes, Spirit Airlines. Apparently their similar strategy out of Fort Lauderdale isn’t crazy (well, it’s a similar strategy, but not exactly the same. Orlando is a leisure destination in large part, while Spirit seems to focus its operation on the VFR – visiting friends and relatives – crowd out of South Florida).

In any case, the diversification from their original JFK-based strategy is smart, and there are lots more cities where they can reach with A320s from Orlando. Look for additional focus there in 2009.

Virgin America, which had announced plans to serve Chicago in early 2009, will abandon that idea after it was unable to secure gates from other airlines at the overflowing airport.  Look for an announcement to launch service to Boston and/or Miami in the near future.