Marc
12th April 2006, 01:31 PM
From USAToday (http://www.usatoday.com):
Airlines raise base fares sharply, still fill planes
By Dan Reed, USA TODAY
Last year, U.S. travelers were feasting on airfares that, on average, were the lowest ever when adjusted for inflation.
No more. Last week, the USA's big airlines tacked $50 onto their unrestricted coach fares in most markets. Few people actually buy those high-end tickets, but most discount fares are set as a percentage of those unrestricted fares. So, such a large jump in those benchmark prices hits the average traveler in the wallet.
That's the most recent in a string of targeted and general fare increases, including a small but telling industrywide increase in early March triggered by Southwest Airlines, the king of the discounters. Taken together, the fare increases have produced a double-digit percentage rise in the cost of the average airline ticket since fall.
Fare prices are likely to go higher still, perhaps a lot higher.
Strong travel demand, plus the airline industry's newfound restraint in adding flying capacity, are giving U.S. carriers greater ability to name their prices than at any time since 2000.
While that means bargains are scarcer and trips costlier, it also means domestic carriers have at least a shot at financial stability, which has eluded them since recession and terrorism in 2001 knocked their business into a depression.
Andrew Winterton, an executive at consultant American Express Business Travel, says airlines have entered a prolonged period of more fare increases, fewer fare sales and low limits on the number of tickets sold at the lowest published price.
"If airlines are going to stay in business, they have to begin pricing for profitability," Winterton says.
Sally Gray, a broadcast equipment saleswoman from Saratoga, Calif., says she was shocked when she tried to book a flight from San Jose, Calif., to Sioux Falls, S.D., at the last minute. She couldn't get a seat for less than $1,050 round trip. "I didn't want to permanently buy the seat, I just wanted to sit in it for a couple of hours," she said. Still, Gray had to go, so she bought the ticket.
The run-up in fares can be calculated in various ways. Among them:
• The average domestic fare paid per mile flown was up 12.5% in February from a year earlier, when fares were the lowest ever in inflation-adjusted terms. A 2,000-mile trip that cost, on average, $229 in February 2005, was up to $258 this past February.
•The price of the typical one-way business fare between Chicago and Washington was $339 in early April, up 71% from a year earlier, according to price-tracker Harrell Associates. The demise in January of discounter Independence Air, based at Washington Dulles, influenced that jump. But the defunct carrier was not a factor on many routes, such as Detroit-Los Angeles, where the business fare was $599 in early April, up 29% from a year earlier.
• A broader sampling of business travel fares done by American Express Business Travel shows that the average one-way business fare rose steadily through most of 2005.
For 329 popular domestic routes, it reached $223 in the October-December quarter, up more than 10% from $202 from the first quarter of the year.
• Southwest Airlines, the giant discounter popular with leisure travelers, pushed its average one-way fare above the psychologically important $100 mark on March 10 when it added $2 to $4 each way to most fares.
It also raised the absolute cap on its fares by $10, to $309 one way.
More... (http://www.usatoday.com/travel/flights/2006-04-12-airline-prices_x.htm)
Airlines raise base fares sharply, still fill planes
By Dan Reed, USA TODAY
Last year, U.S. travelers were feasting on airfares that, on average, were the lowest ever when adjusted for inflation.
No more. Last week, the USA's big airlines tacked $50 onto their unrestricted coach fares in most markets. Few people actually buy those high-end tickets, but most discount fares are set as a percentage of those unrestricted fares. So, such a large jump in those benchmark prices hits the average traveler in the wallet.
That's the most recent in a string of targeted and general fare increases, including a small but telling industrywide increase in early March triggered by Southwest Airlines, the king of the discounters. Taken together, the fare increases have produced a double-digit percentage rise in the cost of the average airline ticket since fall.
Fare prices are likely to go higher still, perhaps a lot higher.
Strong travel demand, plus the airline industry's newfound restraint in adding flying capacity, are giving U.S. carriers greater ability to name their prices than at any time since 2000.
While that means bargains are scarcer and trips costlier, it also means domestic carriers have at least a shot at financial stability, which has eluded them since recession and terrorism in 2001 knocked their business into a depression.
Andrew Winterton, an executive at consultant American Express Business Travel, says airlines have entered a prolonged period of more fare increases, fewer fare sales and low limits on the number of tickets sold at the lowest published price.
"If airlines are going to stay in business, they have to begin pricing for profitability," Winterton says.
Sally Gray, a broadcast equipment saleswoman from Saratoga, Calif., says she was shocked when she tried to book a flight from San Jose, Calif., to Sioux Falls, S.D., at the last minute. She couldn't get a seat for less than $1,050 round trip. "I didn't want to permanently buy the seat, I just wanted to sit in it for a couple of hours," she said. Still, Gray had to go, so she bought the ticket.
The run-up in fares can be calculated in various ways. Among them:
• The average domestic fare paid per mile flown was up 12.5% in February from a year earlier, when fares were the lowest ever in inflation-adjusted terms. A 2,000-mile trip that cost, on average, $229 in February 2005, was up to $258 this past February.
•The price of the typical one-way business fare between Chicago and Washington was $339 in early April, up 71% from a year earlier, according to price-tracker Harrell Associates. The demise in January of discounter Independence Air, based at Washington Dulles, influenced that jump. But the defunct carrier was not a factor on many routes, such as Detroit-Los Angeles, where the business fare was $599 in early April, up 29% from a year earlier.
• A broader sampling of business travel fares done by American Express Business Travel shows that the average one-way business fare rose steadily through most of 2005.
For 329 popular domestic routes, it reached $223 in the October-December quarter, up more than 10% from $202 from the first quarter of the year.
• Southwest Airlines, the giant discounter popular with leisure travelers, pushed its average one-way fare above the psychologically important $100 mark on March 10 when it added $2 to $4 each way to most fares.
It also raised the absolute cap on its fares by $10, to $309 one way.
More... (http://www.usatoday.com/travel/flights/2006-04-12-airline-prices_x.htm)
