Airlines have cut their fares to amid an economic slump

Air and cruise fare sales began toward the end of 2008 and have continued into the first weeks of this year.

On Monday, Sir Richard Branson's Virgin Atlantic raised the stakes by slashing the price of business class tickets by 40 percent.

The cut price applies to numerous destinations including the Caribbean.

Analysts have suggested that the decision appeared to reflect a downturn in the business market, a mainstay of the travel trade.

Britain began the round of price cutting just before Christmas in what industry watchers predicted would be a long price war during the global economic downturn.

Package holidays

British Airways knocked more than 20 percent off some flights and Virgin also introduced big savings.

Antigua, Barbados and St Lucia are among destinations primed for lower fares.

A spokesperson for the Association of British travel Agents, acknowledged that there are some exceptional deals available for flights and package holidays at the moment.

"Across the board, you will find the best deals there have been for years," she said.

Over in the United States, the fare slashing showed no signs of abating as the new year opened.

	Cruise liners have got larger at a time when travel budgets are tight

Many experts and even executives at some airlines had expected that after deep capacity cuts went into effect starting in September, the number of fare sales going forward would be fewer and farther between.

But fuel prices have come down significantly, and the weak US economy has eroded demand for air travel.

Oil prices

One industry operator said that it was not unusual for airlines to announce fare sales in January but what's different for several carriers this year is that the discounts are for travel extending as late as June.

Last year, US airlines cut jobs and made dramatic reductions in capacity among measures to stem heavy losses.

If oil prices remain low and the economy doesn't worsen, some analysts expect the industry to be profitable in 2009.

When it comes to cruises, larger cruise ships are also competing to fill an increasing number of cabins, which means price cuts.

Last year, ten new ships were launched, with at least five more due this year, including Royal Caribbean's Oasis of the Seas in December, capable of carrying 5,400 passengers.

Attacks

Jo Rzymowska, the managing director, told The Times of London: "Holidaymakers will have better prices and value-added deals this year - it's going to be the most challenging year that we can remember."

In December, Carnival CEO Micky Arison said 2009 occupancy levels for advance bookings were running behind last year, with ticket prices for these bookings also at lower levels.

In fact, agents say cruise fares to the Caribbean, Mexico and other popular winter destinations had fallen below the half-price deals offered in the wake of the September 11, 2001 terrorist attacks on the United States.