Airlines have used surging oil prices to justify fare increasesof up to $60 per ticket since the start of the year. but the risingcost of fuel isn’t the only reason it’s getting more difficult tofind cheap fares.
The improving economy, a shrinking supply of seats and industryconsolidation are also to blame.
“This is probably going to be the worst year we have seen in 10years in terms of finding bargains,” says Tom Parsons ofBestFares.com, a website for travel deals.
Even before turmoil in the Middle East drove oil prices higher,airfares were headed higher. The average cost of a round-tripticket on a U.S. airline was $360 before taxes at the start of2011, a 9 percent increase from the previous year. by summer thatfigure could reach $430, says Robert Herbst, an independent airlineanalyst.
Airlines have the upper hand on prices for several reasons:
_ The improving economy. Business travelers are expected to take441 million trips this year, a 3 percent increase from 2010. As aresult, airlines are reserving more seats for pricey last-minutebookings. That leaves fewer cheap fares for leisure travelers, whotend to book further in advance.
_ fewer seats. during the recession, airlines reduced the numberof routes and planes they fly. As travel demand picks up, thisshrunken supply of seats allows the industry to charge more. Planesare 82 percent full on average, compared with 70 percent fullbefore the recession hit in late 2007.
_ Consolidation. Six airlines have combined into just three overthe past 14 months _ Delta and Northwest, Continental and United,Midwest and Frontier _ leaving bargain-hunters with fewerchoices.
American Airlines raised U.S. fares by $10 per round tripWednesday but pulled back the increase Friday after other majorairlines decided not to follow suit. It would have been the seventhbroad price hike this year.
It isn’t just the base fare getting more expensive. Checkingbags, reserving an aisle seat and other services are no longeruniversally free.
Another change working against leisure travelers is the buddingdispute between airlines and online travel sites. The airlines wantto pay the sites lower commissions for each ticket purchased. Theresult for fliers: not all available flights can be found on somesites. for instance, Orbitz, Expedia and Hotwire no longer listAmerican Airlines flights.
“It’s just more work for the consumer to figure out who has thebest fare,” says Anne Banas, executive editor of travel advice siteSmarterTravel.
Despite everything working in the airlines’ favor, the industryis not expecting a comfortable ride over the next year. while U.S.airlines earned a combined $4.1 billion in 2010, the rising cost offuel threatens to push many of them into the red in 2011. Fuelaccounted for almost 25 percent of the airlines’ operating expenseslast year, the biggest cost after labor.
Jet fuel topped $3 a gallon last week and is now up almost 50percent from last year. even if prices rise no further, airlineswill have to raise average fares by 10 percent just to break even,says Herbst.
Some high-traffic business and leisure routes, such as New Yorkto Los Angeles, will see large hikes, Parsons says. The cheapestfare between those cities last July was $382. This year, it’s $544.Parsons notes a handful of domestic routes, such as Dallas to SanFrancisco, are down thanks to new competition.
International routes aren’t offering any relief, either. Thecheapest available August flight from Miami to Paris cost $1,250this week, 53 percent higher than last year, according toSmarterTravel.
Vacationers looking for the cheapest tickets should aim to flyon Tuesday and Wednesday, the least busy days for the industry,Parsons says.
Booking hotel and air packages can also yield savings. Here’s anextreme recent example found online: a trip to Las Vegas includedtwo round-trip tickets on US Airways, three nights at the Excaliburhotel and two free show tickets, all for less than the cost of manyround-trip fares to Las Vegas.
Copyright 2011 The associated Press. all rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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