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Fuel Costs Cited as Airfares Go up Again

February 27, 2012

Hugo Martin, The Los Angeles Times, February 27, 2012

For the third time this year, several of the nation's major airlines raised airfares last week, with United and Continental airlines initiating a $4 to $10 increase in round-trip ticket prices.

Virgin America, Delta Air Lines, US Airways and American Airlines have matched the increase, but JetBlue Airways and the nation's largest domestic passenger carrier, Southwest Airlines, have yet to follow.

A previous increase, initiated in January by Delta, was rescinded when several major airlines refused to match the increase.

Industry executives said the latest increases weren't unexpected considering the rising cost of operating jetliners. They pointed to several statistics outlined in an economic report released this month by Airlines for America, a trade group for the nation's largest airlines.

For example, the report said the nation's airlines have cut fuel consumption by using more fuel-efficient jets. But fuel prices jumped more than 40 percent from 2005 to 2011, offsetting most of the savings. As a result, the nation's airlines spent $50.5 billion on fuel last year, up from $33.2 billion in 2005.

So how did the nation's airlines end last year with a slim 0.3 percent profit margin?

Industry experts said most airlines stayed in the black by cutting costs, including reducing staff and consolidating facilities. Airlines also tried to get as much revenue as possible out of each flight. They did this by filling an average of 82 percent of available seats in 2010, up from 72 percent in 2000.

In addition, airlines generated more money from baggage-check fees and charges for food, entertainment and other onboard extras. The industry pocketed an average of $22 in fees per passenger per round trip in 2010, up from $3 per passenger in 2000, according to the report.

John Heimlich, chief economist for the trade group, said the report "is trying to tell a story about what is going on in the industry."



And now more bad news for travelers: The average hotel room rate in North America climbed 7 percent in January.

The increase was reported in a new study by Pegasus Solutions Inc., a Dallas technology company for hotels and travel businesses. The same report, however, showed that travelers looking to save money are spending more time searching the Internet for the best deals.

The study, which analyzed booking data for about 90,000 hotels worldwide, found that most travelers were not taking the first deal they found. The number of searches on hotel and travel websites for every room booked in January jumped 20 percent from a year earlier.

Travelers also looked to save money by cutting the length of their trips an average of 2.5 percent and booking further in advance.

"Despite swirling economic issues, consumers are determined to travel," the report concluded.



Spirit Airlines just couldn't resist the temptation to join the hysteria surrounding New York Knicks point guard Jeremy Lin.

The low-fare carrier recently began to advertise "Linsanely Hot Fares" on its website on flights throughout the country.

The ads go on to say, "Score Big with our Linsanely low fares. ... Don't pass on this sale because it won't go into overtime."

Considering that Spirit is based in Miramar, Fla., just up the road from the Miami Heat's home arena, it's surprising that the carrier has not launched a campaign tied to popular Heat players.

Maybe Spirit couldn't come up with something clever that rhymes with LeBron.


(c)2012 the Los Angeles Times

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