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Decoding Phone Bills Is This the End of Cheap Air Travel?

June 15, 2008

By SCOTT MCCARTNEY

You can fly between New York and Los Angeles for as little as $370 round-trip, not including taxes and government fees, on JetBlue. Twenty bucks more on American.

And out of that, how much will the airline spend on fuel? Almost $300 per passenger for JetBlue at recent prices, and nearly $500 for American.

While most consumers know all too well how much it costs to gas up their cars, few know how much they are paying for gas when they fly on an airline. It turns out to be shockingly high at today’s prices – well more than half the cost of the average ticket on many routes.

That doesn’t leave a lot of money to pay for all the other costs of running an airline – labor, airplanes, maintenance, insurance, landing fees, facilities and managers. And it goes a long way toward explaining why air travel has gotten so miserable for consumers, as airlines slash service, raise prices, pile on fees and nickel-and- dime in multiple ways.

One tiny measure of the travel morass: JetBlue stopped giving away headsets to watch its free television on June 1. Headsets now cost $1, although you can bring your own earphones.

Most other changes are far more disruptive to travelers. With airlines planning to ground airplanes and erase flights from schedules beginning in the fall in order to drive ticket prices up, the high fuel cost per passenger may well limit the opportunity of Americans to fly cheaply, something millions have enjoyed for many years. Jet travel may return to its early days as something more of a luxury to be consumed sparingly.

Many fares have already jumped $50, $100 or more, and airlines are trying to make it harder for business travelers to use cheap fares by reinstating Saturday-night stay requirements and other restrictions on low fares.

Chris Scurto of Denver has seen prices double for some of his business trips. Trips to Los Angeles and Chicago cost about the same as last year because of competition on those routes, but routes without competition are soaring in price. Even though he was booking several weeks in advance, a ticket to Sioux Falls, S.D., cost $972 recently, compared to $450 two months ago.

A personal trip to Traverse City, Mich., is now priced at $1,195, compared to $385 a year ago. Scurto says the family of five may not go, or will opt to use frequent-flier miles. “We had been saving them for a trip to Europe, but hopefully oil prices will moderate by the time we take that trip,” he said.

Before the invention of the jet engine, fuel was the biggest expense for airlines. But jets were far more fuel-efficient, and labor replaced fuel as the biggest expense.

Now the industry has flip-flopped, with fuel again the largest expense, says Andrew Watterson, partner at consultancy Oliver Wyman Group, a unit of Marsh & McLennan Cos.

“If this keeps up, air travel becomes a much pricier endeavor,” Watterson said. Airlines, he notes, cut costs enough to make money last year when oil prices were around $70 a barrel. At $135 a barrel or more, “this is drastically different.”

Since oil began its dramatic climb in 2004, airlines have been scurrying to fly more fuel-efficiently. They have installed winglets on jets to improve performance and trimmed weight by eliminating magazines in cabins and carrying less fuel above required reserve levels, among other measures.

They fly at slower speeds and check the skin of airplanes for dents that would increase drag. Reducing flight delays also helps – since planes wouldn’t sit around or fly circles in the air as much. Buying or leasing new jets that are more fuel-efficient is also an option.

Discouraging passengers from bringing baggage because of high fees might provide some fuel savings by reducing weight, but not if travelers simply stuff more into carry-on bags and cram them into overhead bins.

Oliver Wyman analyzed the average trip on the average plane for U.S. carriers and found a per-passenger fuel cost of $137.60 round- trip, with oil prices at $135 a barrel. The current average round- trip domestic fare in the United States, factoring in discount airlines and network carriers, is estimated at $263, not including government taxes and fees. On average for U.S. airlines, more than half of the fare they get buys fuel.

That’s a staggering amount when just four years ago fuel costs sucked up only 10 to 20 percent of tickets. When fuel was $75 a barrel last year, the average fuel bill was less than 30 percent of the average ticket price.

Today’s higher prices mean airlines have to get about $60 round- trip out of the average passenger over last year’s prices to cover the higher fuel costs – thus the flurry of baggage fees, fare increases and other means of wringing more bucks out of customers. Ever notice a mysterious charge on your cell phone bill for ring tones, premium text messaging or other mobile content you didn’t authorize?

Recently, AT&T Mobility announced it would settle a group of class-action lawsuits and refund consumers who were billed for unauthorized third-party mobile content, such as text messaging, daily horoscopes and wallpapers.

Like many cellular companies, AT&T doesn’t provide the content but bills its customers on behalf of third-party vendors.

Consumers nationwide have been fighting back against such cramming and have filed multiple lawsuits against the nation’s major cell phone carriers and third-party mobile vendors over charges for which they didn’t sign up placed on their phone bills .

So to make sure you don’t pay for content you didn’t authorize, review your phone bill carefully each month. Dispute any charge you did not authorize, even small ones. Contact the third-party vendor or your cell phone company and ask for the charges to be removed .

Sue Macomber, with the Utilities Consumers Action Network, a nonprofit group in San Diego, advises consumers write a letter to the cell phone company so the complaint is officially logged. Send your letter by certified mail and request a return receipt, Macomber said, and include in your letter a deadline for when you expect a written reply or for the charges to be dropped.

Often the services are targeted to children , many of whom don’t realize they’ve subscribed to a ring tone service that costs $9.99 or more a month. C anceling or removing the charges can be difficult.

Under the recent settlement, which received preliminary court approval, AT&T has agreed to refund current or former customers for unauthorized charges from Jan. 1, 2004, to May 30, 2008, provided they haven’t already received a refund. Customers who were billed wrongly for subscription services can claim up to three of their monthly bills during that same period. The company did not admit wrongdoing in the case.

To claim a refund, go online to thirdpartycontentrefund.com.

Sometimes, consumers unknowingly subscribe to such services when they fill out a form or enter a contest that asks for a cell phone number; they don’t realize they have subscribed for the monthly ring tone, horoscope or joke service until the fee appears on their cell phone bill.

AT&T now requires customers who sign up for third-party services to confirm their enrollment by replying to a text message. It also requires the content providers to send monthly reminders with instructions on how to unsubscribe from such services.

Specific tips

* Carefully review your telephone bill every month. Are there charges you didn’t place or services you didn’t authorize?

* Carefully read all forms and promotional materials – including the fine print – before signing up for telephone or other services to be billed on your phone bill.

* Call your cell phone company and ask whether it will block text messages or other content to your phone.

– Phuong Cat Le, Seattle Post-Intelligencer

I’LL DO IT TOMORROW

94 percent of married women maintain a “honey-do” list, according to a survey sponsored by Mighty Putty.

78 percent of those tasks remain unfinished for weeks, months or even years. 94% $8.8b $472m DIVINE INTERVENTION

$8.8 billion is the estimated amount of money given by U.S. religious congregations of all denominations to the developing world in 2006 for relief and development in poor countries, according to the 2008 Index of Global Philanthropy, published by the Hudson Institute’s Center for Global Prosperity. The figure excludes support for evangelism. BALLPARK FIGURE

$472 million is the average net worth of a major league baseball team in 2008, according to a study conducted by Forbes.

$1.3 billion is the net worth of the New York Yankees, the most valuable MLB team.

– Compiled by John MacIntyre

consider this

A round-trip flight from New York to Los Angeles on JetBlue …

Base cost to you As little as $370 round-trip.

Airline’s fuel costs $300 at recent prices.

Originally published by BY SCOTT MCCARTNEY | THE WALL STREET JOURNAL.

(c) 2008 Virginian – Pilot. Provided by ProQuest Information and Learning. All rights Reserved.




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