September 8, 2008

Local Airfares Hold Their Own While Going Up Elsewhere

By Lewis, Connie

Airfares are on the rise at major airports nationwide, but if it's any comfort, they've remained flat in San Diego.

The average domestic fare from Lindbergh Field was $296 in the first quarter, up a couple bucks from the year-ago quarter, according to a report from the U.S. Department of Transportation in late July.

One-way fares for flights originating at 100 of the country's major airports averaged $332, an increase of 4.4 percent in the first three months of 2008 the largest year-to-year increase since the second quarter of 2006, the DOT report showed.

Inflation, meanwhile, rose at a rate of 4 percent from the first quarter of last year to the first quarter this year.

In calculating average domestic itinerary fares the DOT included taxes and fees, but not bonus or frequent-flier miles.

Cincinnati/Northern Kentucky Airport had the highest average fare at $535 and Atlantic City International in New Jersey had the lowest at $109. But year-over-year, Boston's Logan International had the highest increase at 15.6 percent, followed by Washington Dulles International; Houston's George Bush Intercontinental; Reagan Washington National and Chicago Midway airports.

Fares at Los Angeles International were rising faster than the national norm, with a 6 percent increase from an average $307 in the first quarter last year to $325 in the first three months of 2008.

The fare hikes are an indication that airlines have been able to push ticket prices higher as they struggle to cover costs in a time of record fuel prices.

Still, not by much, at least in the case of Lindbergh Field, the average one-way fare was $241 in the first quarter of 1995.

Overhead To Recoup

Though crude oil has dropped by more than $20 a barrel in recent weeks, analysts don't expect airfares to decline.

On Aug. 4, the price of crude closed at $121.41 a barrel on the New York Mercantile Exchange, the lowest since May. Yet it traded as high as $147 a barrel on July 11, and analysts say that even if it goes down to $100, airlines have a tremendous amount of overhead to recoup.

Several carriers have recently announced plans to cut back flights and routes. But Southwest Airlines, which has the major share of Lindbergh Field's passenger market at 35 percent, is not among them.

"Southwest has been sort of the lone ranger out there buying its fuel on long-range contracts, and my sense is that it has put downward pressure on other airlines flying out of Lindbergh," said Carl Winston, director of San Diego State University's Hospitality and Tourism Management School.

Meanwhile, reports show that customer complaints about poor service, late arrivals, cancellations and delays are on the rise.

Nonetheless, Lindbergh Field served more passengers in the first half of this year than the first half of 2007.

According to the San Diego County Regional Airport Authority, the agency that oversees operations at Lindbergh Field, 9.2 million passengers passed through its gates between January and June, an increase of 5 percent from the same period a year ago. The number of those flying in was up by 5 percent, the same as the tally of those flying out.

At the end of March, the total passenger count stood at 4.4 million, up 7 percent from the first quarter of 2007.

Copyright San Diego Business Journal Aug 11, 2008

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