Summer airfares may climb 15% from a year earlier
As the summer travel season approaches, airline industry experts predict that soaring fuel prices and a sharp pickup in passenger demand will push airfares up 15% over a year earlier — to levels not seen since before the economic downturn.
Fare hikes have already begun, with six of the nation’s largest airlines each raising rates at least five times since Jan. 1 for nearly all routes.
By the time the peak summer travel season rolls around, travel industry experts predict, domestic airfares may reach an average of nearly $390, up from a low of $302 two years ago.
“We are definitely getting higher and higher and higher fares,” said Tom Parsons, who runs the popular website BestFares.com. “They’ve been going up once or twice a month, a nickel here and a dime there.”
It adds up. A round-trip ticket from Los Angeles to Baltimore now costs at least $380, up from about $200 in summer 2009, Parsons said.
Passengers may see the biggest hikes in the price of international flights, partly because of less competition among airlines for those routes.
For example, the cheapest round-trip flight from Los Angeles International Airport to Frankfurt, Germany, in the first week of May 2009 was $499, including taxes and surcharges, Parsons said. Last week, he said, the least-expensive flight for the same time period on the same route was $1,067.
Frequent travelers say the higher prices will affect their summer travel plans.
For Carolyn Ziegler-Davenport, a retiree living in Frazier Park, Calif., the higher fares mean no more flights for weekend visits to Northern California. Instead, she and her husband will make other plans this summer, such as taking in concerts at the Hollywood Bowl or short trips in their camper trailer.
“The prices certainly won’t encourage spur-of-the-moment trips,” Ziegler-Davenport said. “Price is often the deciding factor, and often the decision is to forget it.”
Airfares have been on a roller-coaster ride since summer 2008, when crude oil prices reached a record $145 a barrel and the average airline ticket for travel within the U.S. shot up to $359 in the three months that ended in September — the highest in decades, according to the federal Bureau of Transportation Statistics.
Along with all the hardship it brought, the recession led to a steep drop in demand in summer travel, pushing the average domestic airfare as low as $302 in the three months that ended in June, down 13% from $347 a year earlier, according to federal statistics.
But as the economy improved last year Americans began to travel again, pushing ticket prices up again.
In recent months, tensions in the Middle East and North Africa have increased fuel prices. That has spurred most of the nation’s major airlines to adopt half a dozen airfare hikes, each increase adding about $10 a flight.
Airline representatives said the increases were needed to respond to a 49% increase in average jet fuel prices this month compared with April 2010. Fuel is the airline industry’s biggest expense, accounting for 25% to 30% of all operating costs.
“At the end of the day, airlines are trying to keep pace with the rising cost of doing business,” said Steve Lott, a spokesman for the Air Transport Assn., the trade group for the nation’s airlines.
Airline officials decline to comment about future airfares, saying they don’t want to divulge such information to their competitors. But industry analysts predict fares probably will reach prerecession levels of 2008 by this summer.
“I think anyone who expects airfares to not increase is going to be very disappointed,” said Robert Herbst, a former pilot and independent airline consultant who expects fares to rise 15% this summer from a year earlier.
In addition to the higher fares, airline passengers often must pay extra fees to check bags, change reservations and request a pillow or blanket in the plane. In the first nine months of 2010, the nation’s airlines collected more than $2.5 billion in checked-baggage fees alone, according to the federal Bureau of Transportation Statistics.
Since the start of the recession, the airline industry has responded to the slump in demand by eliminating unprofitable routes and mothballing unneeded planes in desert airfields.
As the economy improved and travel demand grew last year, most airlines resisted the temptation to add routes or expand their jet fleet. Instead, they packed planes at record levels, with an average of more than 80% of airline seats filled for every flight, according to federal statistics.
“As a whole, the airline industry has acknowledged that it needs to make money and it can’t keep losing any longer,” said Christa Degnan Manning, the research director at American Express Business Travel’s Global Advisory Services, a division of the credit card company.
And with greater demand for airline seats, prices began to soar. The added fuel surcharges in the last four months only hastened the price increases.
With higher prices and crowded airports has come rising passenger frustration.
Gregory White, a medical equipment sales executive from Laguna Niguel, said several years ago he flew nearly 250,000 miles in one year with Delta Air Lines to meet with clients. But now he said he conducts most of his business by phone or over the Internet to avoid the higher fares and the hassles of flying.
“If they really were the friendly skies, I would be there,” he said. “It’s not only from an expense standpoint but also it is just such a hassle.”
Even so, demand for airline tickets remains strong, and travel experts predict the nation’s air carriers will continue to raise fares.
“They are going to continue to try to put through fuel-based hikes, and they will have some hits and misses,” said Rick Seaney, the founder of the travel website FareCompare.com. “Will they try to sneak a few more as we get closer to summer? I think so.”
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