AIRLINES
Fewer flights, higher air fares coming soon
ATLANTA — The grip U. S. airlines have on travelers’ wallets is about to get tighter as carriers go ahead with plans to trim their domestic schedules due to the high cost of fuel.
Airline executives acknowledge that despite the economic downturn, fares will rise, discounts currently available will be scarce, and routes and frequencies of flights will be reduced as domestic capacity is cut through the end of the year.
The changes starting in September come on top of a litany of new charges — for luggage, drinks, pillows and other amenities — announced by some airlines earlier this year.
“Airline travel is airline travel — it’s been bad for a long time,” Chris Bardasian, an American Airlines frequent flyer, said recently at Dallas-Fort Worth International Airport. “I suspect prices will go up, fewer people will travel, and if you’re willing to pay the price it will be fine.”
On average, domestic fares between large metro cities are already up roughly 16 percent since Jan. 2, while fares between small cities are up roughly 37 percent year-to-date, according to Rick Seaney, head of air fare research site FareCompare.com.
The cheapest round-trip ticket with a 10-day advance purchase on an American Airlines flight from Chicago to New York cost $258 on Aug. 26, excluding government and airport fees. That was an 87 percent increase from the $138 it cost on Jan. 2 for a similar advance purchase, according to Fare- Compare.com. The cheapest round-trip ticket with a 21-day advance purchase on a United Airlines flight from Denver to Washington cost $382 on Aug. 26, excluding government and airport fees. That was a 37 percent increase from the $278 it cost on Jan. 2, Seaney said.
Recently announced air fare sales for travel during the traditionally slow fall season will be harder to come by as more capacity comes out of the system in the last four months of the year.
“If somebody sees a good fare, they should grab it,” said Kevin Healy, senior vice president of marketing and planning for AirTran Airways.
American Airlines, United Airlines, Delta Air Lines, Northwest Airlines, Continental Airlines, US Airways, Jet- Blue Airways, AirTran and Alaska Airlines plan to cut domestic capacity during the third and fourth quarters by single-to double-digit margins.
JetBlue, for instance, in September will end service between several cities, including Boston to San Francisco and Washington to Las Vegas. Southwest Airlines Co., which had resisted the kinds of capacity cuts being made by other carriers, will end service in November between Kansas City and Sacramento, Calif., and between Oakland, Calif., and Tucson, Ariz.
Fewer seats in the air means planes that remain will be fuller, which gives airlines pricing power to raise fares.
“The reality is — and I don’t want to diminish this — the industry is going to have to cover its costs,” said American Airlines chief Gerard Arpey.
Several airlines are now charging fees for a first checked bag. Some have imposed a fuel surcharge on frequent flier reward tickets. US Airways is even charging for soda.
While the price of a barrel of oil has fallen from a high of $147.27 in July to $115.46 on Friday, that is not likely to slow the upward spike in fares, according to fare researcher Seaney. The current price of oil is still more than five times what it was in mid-August 1992, and it is more than four times what it was in mid-August 2002.
“I think if oil prices continue to go down, you will hear calls for relaxation of fuel surcharges, but that doesn’t mean they won’t hike base air fares,” Seaney said.
He said that if load factors reach 90 percent, “There will be no reason to discount.”
