Now's the time to book the cheapest holiday in years

Australians wanting to visit the United States can benefit from some of the cheapest airfares and prices in years, a Sydney travel professional says.

Hotels and airlines, stung by the downturn in business, are wooing customers with cheap packages.

The price war between the airlines flying to the west coast of the US is also helping consumers.

Even with the relatively low Aussie dollar, an American trip can work out much cheaper than it was a year ago.

Justin Montgomery, managing director of Creative Holidays, has made price comparisons between now and previous years and come up with interesting findings.

For example, last year a two-night Creative Holidays package with Air New Zealand from Sydney to Los Angeles valid for travel from April 1 to July 14, 2008 and September 1 to December 14, 2008 cost $A1,927, including free car hire.

The 2009 package, which is valid from April 18 to June 27, is for four nights and costs $A1,219.

"This year you can receive an extra two nights accommodation and both deals include free car hire," Montgomery says.

"The value proposition now is better than it was 12 months ago to travel on packaged holidays as you can see by the USA pricing.


"For the first time in a long time you're seeing massive discounting by airlines ... and by hotels.

"With fuel prices easing you're seeing a discounting in fuel levies. So the combination's there.

"In my time in the industry (20 years) I've never seen such low prices to the US. These fares now are rivalling the fares of the early 90s."

But Montgomery says he doesn't think the airlines can drop their prices much further.

"There's a point in time where they will park aircraft rather than fly them," he says, echoing comments by Virgin Blue boss Brett Godfrey, who warned that discount fares could be grounded in a tough economy.

Godfrey has said while Virgin is happy to discount, the fares will be difficult to sustain with the level of capacity.

The arrival of V Australia on the trans-Pacific route has sparked a price war as the newcomer goes head-to-head with Qantas, which is increasing the number of services operated by its flagship A380, United Airlines and Delta from July.

Virgin group chairman Richard Branson has warned that V Australia may have to stimulate the market "a bit more than we thought" and that fares likely will remain low "for most of the year", with several promotions planned to stimulate travel.

"We were planning for lower load factors," he said. "But yes, our entry will spark a price war."

Virgin expects that Qantas and other competitors will slash their prices again. And consumers are going to be the beneficiary.

Branson has said the public can expect rock bottom fares if there were vacant seats on a V Australia plane prior to takeoff.

"We will never go out with an empty seat so if we have an empty seat we will slash the fare," Branson says.

David Epstein, executive general manager government and corporate affairs at Qantas, has defended the airline, saying its service on the Pacific route was in "a class of its own".

"We're the only airline to operate new generation aircraft across the Pacific, in the A380.

"Our fares as well are very competitive."

American Airlines has also been in pitching mood with the launch of a new Australian website:

It offers "best fares, airline news, special offers and vital travel information".

It's offering "lowest-ever limited edition fares", from Australia to Los Angeles, Dallas, Chicago or New York, all via Tokyo, starting from $A999 return.

While domestic ticket prices are falling, Montgomery says Europe and the UK also are discounting as is New Zealand.

"There's also exceptional value going over to New Zealand, with some fares now with the airfare component less than $25," he says.

Jetstar has launched $NZ1 fares to NZ, following the slashing of all its fuel surcharges on its flights (except Japan).

Tourism New Zealand sees this a great opportunity to vigorously pursue the Australian market. While the Europe and Asian market is down, they have racked up their advertising and launched a new campaign to encourage Aussies to make the most of the high Australian dollar compared to the NZ dollar.

Last year's campaign identifying New Zealand as the youngest country on earth is being built on with new ads.

With less Europeans visiting the land of the long white cloud, there's much more availability of rental cars and hotel rooms at short notice, Tourism NZ says.

Montgomery says now's the time to book your holiday, with the US dollar a small component of packages booked from here.

"We're seeing huge amounts of changes every week.

"People now are being conservative (but) there's a lot of inquiries. People are shopping around, they're looking for good value."

In other parts of the world, hotels in Bali are slashing room rates amid falling occupancies. But the reaction has been mixed.

Budget and mid-range properties popular with Australians are offering the steepest discounts, with some halving published rates, while upmarket resorts hit by a slowing in the executive market are trying to be more creative in their response to the downturn.

"Some two- and three-star hotels are panicking and cutting their rack rates," says Bali Hotels Association executive director Djinaldi Gosana.

"That's a bad idea. We know from experience after the Bali bombings that once we cut the rate, it's very difficult to put up again."