Air Fares Headed Higher
Air fare sales for travel during the traditionally slow fall season will be harder to come by.
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.
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 this month come on top of a litany of new charges — for luggage, drinks, pillows and other amenities — announced by some airlines earlier this year.
“I suspect prices will go up, fewer people will travel, and if you’re willing to pay the price it will be fine,” Chris Bardasian, an American Airlines frequent flier, said recently at Dallas-Fort Worth International Airport.
There were sharp capacity cuts during prior weak economic periods in the early 1990s and between 2001 and 2003, but fares went down as discount carriers moved in and filled the void, offering more competition, analysts said.
But the high price of oil, airlines’ limited ability to further cut costs and the fact that many of the discount carriers are facing the same difficulties as the big carriers make things different this time, analysts said.
“Despite this sluggish U.S. economy, the general demand picture is better than it was post-9/11,” said Standard & Poor’s analyst Philip Baggaley. “In addition, you have this consistent response across the board of airlines raising fares and adding fees.”
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.
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, JetBlue Airways, AirTran and Alaska Airlines plan to cut domestic capacity during the third and fourth quarters by single- to double-digit margins.
Locally, ExpressJet Airlines made its last flight from Tulsa International Airport on Aug. 23. Earlier this year, high fuel prices caused Denver-based Frontier Airlines to end its three daily round-trip flights between Tulsa and Denver.
Other changes in Tulsa include United Airlines dropping its daily nonstop flight to Los Angeles International Airport on Tuesday, Continental Airlines eliminating its two daily nonstop flights to Cleveland Hopkins International Airport on Saturday, and Southwest Airlines’ plan to eliminate two Tulsa flights in January.
American, which employs 7,000 people in Tulsa, will change some of the models of aircraft it flies in and out of the city, but is not planning any reductions of service at Tulsa International, a spokesman said recently.
According to current plans, cutbacks by various carriers will leave Tulsa International with 69 flights a day in September, a 14.8 percent decrease from September 2007, an airport spokeswoman said.
Fewer overall 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,” American Airlines chief Gerard Arpey said in an interview.
Cuts in the number of flights in the U.S. also could mean people who booked flights far in advance for travel after September might have to change their departures or carriers.
The Tulsa World Business staff contributed to this report by The Associated Press.
Originally published by Staff and Wire Reports.
(c) 2008 Tulsa World. Provided by ProQuest LLC. All rights Reserved.