Rising fuel prices pushing up air fares
But higher costs haven't grounded travelers
Friday, May 19, 2006
By Anya Sostek, Pittsburgh Post-Gazette
Elissa Mills could spend more time looking for a cheap fare to Las Vegas than it will take her to actually fly there.
She's already spent hours asking a
travel agent friend for advice and meticulously monitoring Internet fares. "I'm checking every day," said Mrs. Mills, 45, of Buckhannon, W.Va. "Sometimes twice a day."
But even with all her effort, the fares that she has been finding are about double the $200 she spent on her last flight there, about two years ago.
Like many other travelers, Mrs. Mills is finding that the friendly skies are no refuge from unfriendly fuel prices.
"Rising fuel prices are putting upward pressure on fares," said John Heimlich, economist for the Air Transport Association, noting that flight prices were up about 10 percent over this time last year.
Thus far, rising fares don't seem to be having much of an impact on passenger travel. Even if she has to pay $400 to get there, for example, Mrs. Mills still is planning to tag along on her husband's business trip to Vegas.
"They just keep booking; it's really amazing," said Terry Trippler, an airline expert with Cheapseats.com. "We're looking at a summer of 2000 almost -- back to record levels."
Mr. Heimlich said revenue passenger miles, the airline industry's measure of demand, were down only 0.2 percent from this time last year.
As long as Americans want to keep taking vacations, said Mr. Trippler, high fuel prices don't make driving any more attractive than flying.
"If you go back to the Independence Air time, airlines were literally pulling people off the freeways because fares were so cheap," he said. "Today, they're still pulling people off the freeway -- not because fares are so cheap but because gas is so high."
Demand also has been buoyed by business travelers, many of whom don't have the choice to cut back on essential trips.
Because of the relative inflexibility of business travel, those fares have taken the brunt of the increases. Bob Harrell, president of travel consulting firm Harrell Associates, said that as of early May, business fares had risen 22 percent, while leisure fares were up 4 percent.
"It's hard to get anything for less than $300 anymore," said John Hughes, 33, who flew from Jacksonville to Pittsburgh for a business trip Wednesday morning.
At Mellon Financial Corp., the average price that the company has paid for a domestic plane ticket is up 7 percent for the first four months of this year over last year, said Ken Knapp, manager of corporate travel. But the volume of travel has stayed the same, he said.
Mr. Knapp was pleased to see some ticket prices fall after Southwest entered the Pittsburgh market last year, particularly to Philadelphia. But he said prices had rebounded somewhat since last year.
"The Pittsburgh market is an interesting one," he said. "They lowered rates before, and now we've seen them go up."
Mr. Harrell, whose firm tracks flights between Pittsburgh and Philadelphia; Orlando, Fla.; Boston; and New York, said business fares from Pittsburgh had increased an average of 35 percent since last May and that leisure fares had decreased 39 percent. Some of those fluctuations are tied to Southwest, which started flying out of Pittsburgh May 4 of last year.
Fares to some leisure destinations, such as Las Vegas, have seen large increases from Pittsburgh, said Joe Weigler, owner of Shadyside Travel. "The fares are just higher," he said. "Two years ago, you were paying $150 [to fly to Vegas]."
Mr. Heimlich said the market had allowed airlines to raise fares for two reasons.
First, the supply of available seats has decreased as airlines such as US Airways have slashed unprofitable flights to come out of bankruptcy. As a result, planes will be more crowded this summer than they have been for decades, with the average plane now 80 percent full.
Second, "low cost" airlines also have had to raise fares to keep up with jet fuel costs. "The surprise this year is that Southwest has had two fuel increases," said Mr. Trippler. "The last fuel increase, four low cost airlines went along."
Compared with the jet fuel increases, the rising cost of airline fares actually has been modest. Mr. Heimlich said the price of jet fuel had risen 120 percent since 2001 and 28 percent since 2005.
"The fares still haven't really caught up to make enough money based on the costs we're experiencing," he said.
So unless fuel prices drop dramatically, further increases are likely for the rest of the summer.
And consumers and business travelers are expected to keep taking them in stride.
"We keep everything in perspective," said Mrs. Mills. "Gas has gone up. It only makes sense that travel costs would go up, too. Thank God the hotels haven't caught on yet."
