TBO.com - TBO is Tampa Bay Online

Change Is In The Air

ADVERTISEMENT

By HARRY R. WEBER

The Associated Press

Published: August 30, 2008

ATLANTA - The grip U.S. airlines have on travelers' wallets is about to get tighter as carriers move ahead with plans to trim their domestic schedules because of the high cost of fuel.

Executives acknowledge that despite the economic downturn, fares will rise, discounts 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."

There were sharp capacity cuts during 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 certain 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."

Prices Are Getting Higher

On average, domestic fares between large metro cities are up roughly 16 percent since Jan. 2, and fares between small cities are up roughly 37 percent year-to-date, according to Rick Seaney, head of airfare research site FareCompare.com.

The cheapest round-trip ticket with a 10-day advance purchase, for example, on an American Airlines flight from Chicago to New York cost $258 on Tuesday, excluding government and airport fees. That was an 87 percent increase from the $138 it cost Jan. 2 for a similar advance purchase, according to FareCompare.com.

The cheapest round-trip ticket with a 21-day advance purchase on a United Airlines flight from Denver to Washington cost $382 Tuesday, excluding government and airport fees. That was a 37 percent increase from the $278 it cost Jan. 2, Seaney said.

Recently announced airfare sales for travel during the traditionally slow fall season will be harder to book 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.

Booking early for travel during peak times such as the holiday season generally can get you a cheaper ticket than waiting until the last minute. But airlines usually don't offer fare sales for travel during the holidays.

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.

Airlines To End Some Service

JetBlue, for instance, in September will end service between several cities, including Boston to San Francisco and Washington to Las Vegas. Southwest Airlines, 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.

Some airlines, including JetBlue and Southwest, are adding or expanding service to states where other carriers are reducing service, such as Florida. Southwest, however, said recently it will eliminate nearly 200 flights early next year as it struggles with high fuel costs.

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.

Travelers are bracing for the impact of higher fares.

On a recent day at Dallas' airport, passenger Vicki Schweiss, a classic rock DJ in Wichita Falls, Texas, said she might not be visiting her parents in Los Angeles quite so often this fall.

"If I can find a $200 ticket, I'll go," she said. "If there are fewer flights, that won't bother me, but if flights are really expensive, I just won't go or I'll go by myself instead of bringing my son and husband."

At Phoenix Sky Harbor International Airport, Melinda Larson, a retired municipal worker, said she can afford the fare increases. What bugs her, though, are all the new fees.

"I'd just rather they incorporate that in the fare," Larson said of baggage fees some airlines are charging. "And then you're good to go. You don't have to worry about that."

Several airlines are now charging fees for a first checked bag. Some have a fuel surcharge on frequent flier reward tickets. US Airways is even charging for soda.

FEELING THE CUTS

AirTran Airways: Plans to reduce capacity 7 percent to 8 percent between September and December.

Alaska Airlines: Its parent company has said the carrier's fourth-quarter mainline capacity will be cut by 5 percent compared with 2007.

American Airlines: Plans to cut its U.S. flying by up to 12 percent after the busy summer travel season ends.

Continental Airlines: Its plans include reducing flights in the United States this fall by about 10 percent.

Delta Air Lines: It has said it intends to cut domestic capacity by 13 percent during the second half of the year. A spokeswoman said a good portion of that would come during the fall.

JetBlue Airways: It has said it expects September capacity to be down 10 percent and does not expect it to grow next year.

Northwest Airlines: It is planning to cut fourth-quarter consolidated domestic capacity by 7 percent to 8 percent.

United Airlines: Fourth-quarter mainline domestic capacity will shrink 16 percent compared with the previous year.

US Airways: It will reduce capacity 6 percent to 8 percent on domestic flights in the fourth quarter.

Sources: Airlines' second-quarter earnings releases, AP archives, AP interviews, airline comments at investor conferences

Share this:

Loading Comments...

Email Print

ADVERTISEMENT