Fares are rising because fuel costs are rising, industry representatives say. A gallon of jet fuel cost domestic U.S. airlines $1.85 in the first quarter of this year, according to the Air Transport Association, compared with $1.45 in the first quarter of 2005.
Airlines May Turn Profit
The U.S. airline industry has lost a staggering $42 billion since 2000, according to the association's chief economist John Heimlich, thanks to a powerful combination of slumping passenger numbers from 2001 to 2004, high labor costs, heavy debts -- and rising fuel costs. This year, Heimlich expects the nation's airlines to lose $2 billion more, though they may turn a small profit in 2007 if they can continue to increase fares, he said.
"The painful reality for passenger carriers is that the domestic market has been unwilling to accept fares that reflect high fuel prices,'' Heimlich said.
Airline losses have come about in spite of the fact that their planes are consistently crowded. Load factors, the percentage of available seats sold, averaged a robust 80 percent last summer, according to Standard & Poor's equity analyst Jim Corridore. This year, Corridore told Reuters, he expects load factors to approach 90 percent.
Even so, the popularity of discount fares -- which hover about where they were in 1988, according to Heimlich -- means that the airlines continue to lose money.
Only Southwest Airlines, the low-cost pioneer among U.S. carriers, is consistently profitable, with Wall Street darling discounter JetBlue Airways losing money and low-fare carrier Independence Air liquidating earlier this year.
Also on the radar screen this summer: persistently long waiting times at security checkpoints in many airports, travel experts say.
Some of the nation's airports have agreed to experiment with a registered-traveler program that would speed fliers who volunteer to have their personal data encrypted on microchips through long security lines. But with most travelers lining up and cooling their heels in the usual manner, airports are expected to be crowded.
At San Francisco International Airport, which dominates international travel in Northern California, the number of international passengers is growing especially fast, according to SFO spokesman Michael McCarron.
"International traffic is up 8 percent over 2000,'' McCarron said of a busy year the aviation industry uses as a benchmark. "It's been strong all year.''
SFO, the Bay Area's prime gateway to and from Asia, should benefit from Americans' growing interest in Asia. The number of Americans considering travel to Asia this year surged to 37 percent from 20 percent in 2005, according to a new survey sponsored by Foster City's Visa International and the Pacific Asia Travel Association, and conducted by A.C. Nielsen.
A busy summer traveling season translated into heavy traffic at Oklahoma's airports in July, but high fuel prices could cool that trend in August.
American Airlines raised prices on round-trip international tickets by $20 Tuesday, citing the rising price of jet fuel.
The cost of getting to Grandma's house is higher than ever. Record oil prices that have punished drivers at the pumps have also pushed airline ticket prices to their highest level in three...
A decade ago, fuel accounted for about 15 percent of airline operating expenses and today it's 35 percent.