Airfares are rising along with oil prices
Airline ticket prices are on the rise again, and even industry experts can’t predict how much higher they will go. All this is making business travel managers very nervous.
For several months, airfares have been pushed up by growing demand and flights’ limited capacity. But the prices have been kept in check somewhat by consumer resistance and competition among airlines.
Now turmoil in the Middle East and North Africa has raised fuel costs, which represent at least 25% of airline expenses. Each $1 increase for a barrel of oil results in $1.6 billion in added costs to the worldwide airline industry, according to the International Air Transport Assn.
So it’s not very surprising that the nation’s largest airlines adopted half a dozen fare increases since Jan. 1. During the fifth increase, however, the power of competition cut the price hike in half.
In late February, major network carriers such as United, Continental, Delta and American raised domestic fares by $20 per round trip. But those increases were later rolled back to $10 when low-fare airlines Southwest, JetBlue, AirTran and Frontier raised their prices by only $10.
“Airlines can’t afford to be one dollar more than a competitor, or they don’t show up on the first page of results” on fare-comparison websites, said Rick Seaney, chief executive of FareCompare.com.
Consumers also have some power over prices, said George Hobica, the founder of travel website Airfarewatchdog.
“The airlines are playing cat and mouse with the consumer: ‘Let’s see how much consumers are willing to take before they say enough is enough,’ ” he said.
But it’s the rising cost of fuel that has many business travel managers nervous.
In a survey of people who manage travel spending for businesses, more than 90% said they were concerned about the effect of rising oil prices on travel costs, with nearly half saying they were “very concerned.” The survey of 472 business travel managers was conducted last week by the Global Business Travel Assn.
• Baggage-check fees cost all taxpayers, Napolitano says
Fees charged by airlines to check luggage are not only costing passengers billions of dollars each year, but they are also costing all taxpayers money too, Homeland Security Secretary Janet Napolitano said.
During testimony before Congress last week, Napolitano said airline passengers are trying to avoid the checked-baggage fee by carrying more luggage with them on planes. Carry-on bags require more labor-intensive inspections by Transportation Security Administration officers, she said.
“When you have to pay to check a bag it increases carry-on luggage, and that means there is more to inspect at the gate,” Napolitano said during testimony before a Senate appropriations subcommittee on homeland security.
The extra cost to the TSA, she estimated, is $260 million a year.
• Frommer’s names top 10 airport lounges
With storms wreaking havoc with airline schedules across the country this winter, more delayed passengers are killing time at airport lounges.
But depending on the airport, you may not mind the wait.
Frommer’s, the 54-year-old travel guide business, talked with frequent fliers, guidebook editors and others in the airline industry to choose North America’s top 10 airport lounges.
Included on the list was United Airlines’ United First International Lounge at San Francisco International Airport, which Frommer’s said looks like a hotel lobby and offers showers, free drinks and free sushi.
Also among the top 10 was the OneWorld Lounge at Los Angeles International Airport, which is operated by British Airways, Qantas and Cathay Pacific. In addition to nine showers, free liquor and Wi-Fi access, the free food is particularly good, Frommer’s said.
Most lounges are open only to passengers with first- or business-class tickets, but some airlines sell day passes for $45 to $50. Frommer’s praised the ReLAX Lounge at LAX’s international terminal, which is open to all visitors; prices start at $15 an hour.
At ReLAX, non-alcoholic drinks are free, as are cookies, fresh fruit and wireless Internet access.
Said Frommer’s: “It’s a quiet and spacious place to watch the planes taxi around and take off.”
