July 27, 2006 Thursday
Airfares soar as planes fill up
Rise is record 10.3%; focus on Delta hike
Roger Yu, USA Today

Soaring jet fuel prices and rising traveler demand are driving high airfares even higher.

Fares for flights departing in the USA rose a record 10.3% in the first quarter of 2006 from a year ago, according to data released by the Department of Transportation (DOT) on Wednesday.

And Delta Air Lines -- in a move likely to accelerate the trend -- raised most domestic fares by $5 one way, bringing the highest coach seat price in its simplified fare structure to $504, and $704 for first class.

Industry analysts say other carriers will likely follow. US Airways, United, Northwest, Continental and American airlines said they are evaluating Delta's move but had taken no action by late Wednesday. If they do match Delta, it would be the seventh industrywide price increase this year, excluding Southwest, according to JPMorgan airline analyst Jamie Baker. That's on the heels of 12 rounds of increases in 2005, he says.

"It's not good for consumers," says Ray Neidl, an analyst at Calyon Securities. But it's better than "if you've got a bunch of bankrupt airlines."

Passenger demand throughout the summer has been especially strong and flights crowded. For example, 88% of United's seats were full in June; 85% for Delta. And several domestic carriers returned to profitability in the second quarter after years of losses. Delta and Northwest remain in bankruptcy court.

The record rise in DOT's airline price index, the highest year-to-year increase since the index's start in 1995, is based on prices of 5 million to 6 million tickets actually used by passengers. Changes in prices are measured each quarter.

Still, the government data show that competition helps lower prices, notes Terry Trippler, an air travel consultant with Myvacationpassport.com. Fares in Denver, where discount carrier Southwest recently began offering service, fell 2.2%. By contrast, cities with fewer discount carriers, such as Cincinnati and Raleigh, N.C., faced the steepest increase in prices, according to the DOT data. Cincinnati, whose airport is a large Delta hub, had the largest year-to-year fare increase for the first quarter, up 36.6%.

Delta spokeswoman Betsy Talton defended the fare increase, saying it was triggered largely by rising fuel costs. Prices for light, sweet crude oil closed at $73.94 per barrel Wednesday, up almost 23% for the year.

Delta introduced its simplified fare program in January 2005 to ease consumer confusion by reducing the number of fare types and eliminating the Saturday-night-stay requirement. With the latest increase, the cap on Delta's SimpliFare for first-class seats has risen 18% since March's $599 level, Baker wrote Wednesday, adding that he expected other carriers to match it in the next two days.

"There's no cap when you keep raising it," Trippler says. "Other airlines were not happy when (Delta) did this, but it's a choice Delta had to make ... 95% of it is fuel."

Holiday airfares could free up some cash
Not all ticket prices will be turkeys
9 November 2007
USA Today

Even as average airfares climb, some airlines are knocking the stuffing out of ticket prices for leisure travelers around the Thanksgiving holidays.

Some of the holiday cuts are 40% or more from previously quoted fares on selected routes, says Tom Parsons, CEO of Bestfares.com. They apply only to certain off-peak days, so passengers need to keep their plans flexible.

But the discounts are the exception to overall rising airfares.

Last weekend, several airlines pushed through a $20 increase on round-trip fares. The biggest full-fare airlines have put in seven increases since Labor Day, and most have stuck, says Terry Trippler of TripplerTravel.com.

"I've never seen fares go up this fast in this short (amount) of time," he says.

Discounter Southwest's maximum walk-up fare was $359 one way. Now, the highest-priced fare on its new "business select" category is $389, up 8.4%.

Thanksgiving travel will cost fliers an average of $358 for a domestic round-trip ticket, up 2.6% from the same holiday period last year and 8.5% from 2005, says Amy Ziff of Travelocity.

That's why the fare sale, initiated last week by Northwest Airlines and picked up by other carriers, could prove a boon to holiday travelers. A round trip between Bangor, Maine, and San Francisco falls 40% to $358 round-trip on the most inexpensive days to fly, even with a seven-day advance purchase, Parsons says.

Flights between San Antonio and Memphis are as cheap as $248, down 42%. Tickets have to be purchased before Nov. 21 for travel on those selected bargain days through Jan. 7.

The cheapest days to fly include Tuesday and Wednesday, the Monday before Thanksgiving and the holiday.

Parsons says another fare-cutting round may be in store as airlines try to fill whatever empty seats remain. But at this point, he says, consumers shouldn't delay buying if they see a fare that catches their eye.

The fares may appear especially attractive given the rise in gas prices, Trippler says. "Filling up the SUV is now very expensive, and flying is probably cheaper."

Now that the price of oil has pushed past the $90-a-barrel mark, airlines are getting hit right along with drivers. Air carriers blame rising oil prices as the prime factor for why fares are on the way up, but strong passenger demand plays a role, as well. Trippler says he doesn't think airlines will drop their spate of fare increases, even if the price of oil plummets.

"When oil comes down, these fares aren't coming down," he says.

Rising air fares in U.S. likely to stay high
By Joe Sharkey
Published: November 13, 2007

AS a major holiday travel season approaches and airlines scramble to cover soaring fuel bills, air fares are going up. And this time, they're likely to stay up.

That's because the big carriers and their low-cost competitors are all in the same boat — or plane. All are balanced on a knife's edge of profitability. With passenger demand staying firm and most planes full on most routes, the airlines for the first time in many years are raising fares "simply because they can," said Terry Trippler, an online air fare analyst.

Since Labor Day, major airlines have raised one-way fares eight times. And most of the increases — like the $5 increase initiated late last week by United Airlines and promptly matched by most competitors — have stuck.

"This is definitely accumulating," said Rick Seaney, chief executive officer of FareCompare.com, a Web site that tracks the universe of airline fares to issue e-mail alerts to subscribers and to provide real-time and historical data for comparison shopping. "A business traveler who was paying anywhere from $250 to $300 one way before Labor Day is paying anywhere from $30 to $35 more one way now."

In the past, airlines often played a cat-and-mouse game with air fares, quietly putting in increases of $10 or $20 across the board or on selected routes. But more often than not, those higher fares failed to stick when competitors ended up not matching the increases.

Several major changes in the system accelerated this year to change that interplay. Even with record delays and cancellations, air travel demand continued to rise to record levels.

Meanwhile, with little profit built into domestic coach fares and with fuel and other costs rising, airlines cut back on the number of seats they flew domestically. At the same time, major airlines put more seats into lucrative international routes.

One consequence of the cutback in domestic capacity was that by the summer, airlines were reporting their highest ever domestic load factors. Load factors are the percentage of available seats sold.

Airlines are now much more free to raise fares because "they have all their seats full anyway" while passenger demand remains firm, Seaney said.

"A few years ago, you would have had load factors in the high 60s and low 70s, but when they got up to over 90 percent this summer, which means that most airplanes are taking off full, that became a deal changer. The supply and demand curve used to favor consumers, but now it's on the airlines' side," he said.

FareCompare.com is a free site. Its revenue comes from advertising, Seaney said. It doesn't book tickets. FareCompare collects its raw data throughout the day from the Airline Tariff Publishing Company, a worldwide company that receives all fare filings from more than 500 airlines.

"On any given day, hundreds of thousands of air fares, even millions, can change," Seaney said.

The Air Transport Association, the airline trade group, said Monday that it is projecting a 4 percent increase in passengers during the Thanksgiving holiday, which starts Friday and continues through Nov. 27. The trade group said that "planes will be, on average, close to 90 percent full."

The system has no slack to accommodate passengers who miss connecting flights or cannot find a seat on an alternate flight. Northwest Airlines, reacting to the industrywide outcry over the many instances this year of passengers being stranded on planes for long hours on tarmacs, announced new provisions to "minimize service disruptions" during the holidays.

Among them are advance notification of potential disruptions. But Northwest also announced a plan, similar to one adopted by JetBlue after thousands of its passengers were stranded at Kennedy Airport during an ice storm last February, to give its captains authority to coordinate with its operations center and "initiate a plan for passengers to deplane" after three hours of waiting on a tarmac.

Meanwhile, Seaney said that unless fuel prices ease, the airlines have little choice but to keep raising fares. "In the last three quarters, the airlines have done real well," he said. But if they don't raise fares enough to cover fuel costs, "they could be back in bankruptcy in a heartbeat."

E-mail: jsharkey@nytimes.com