Holiday Fares to Rise as Airlines Cope With High Costs
Travelers can expect full airplanes, long lines and higher airfares in the upcoming holiday season, as demand swells and airlines continue to grapple with high costs.
That's the forecast of several travel experts and airline executives who said Tuesday that the 2005 holiday travel season is likely to be the most hectic since 2000.
"It's going to be very, very busy," said Tim Wagner, a spokesman for Fort Worth-based American Airlines, the world's largest carrier.
The Sunday after Thanksgiving is typically the busiest airline travel day of the year.
Although fares remain cheap by historic standards, they are more expensive this year than holiday ticket prices a year ago. Terry Trippler, an airline analyst with the Internet travel site Cheapseats.com, said round-trip fares are up about $40 on average.
"This is primarily due to fuel prices," he said during a conference call with reporters Tuesday sponsored by the Travel Industry Association of America. "The airlines have to stop the bleeding, and the only way is to bring up fares."
But for the major carriers, higher prices and heavy traffic aren't likely to translate into profits. Most analysts expect the big hub carriers to post steep losses for the fourth quarter.
American, for example, is forecast to lose about $300 million for the quarter, according to a survey of Wall Street analysts by Thompson First Call Financial.
In some ways, the holiday travel season is likely to mirror the summer of 2005, when airlines posted record-breaking passenger loads as demand swelled. But most airlines continued to report losses, thanks to heavy competition and high fuel prices that erased most revenue gains.
Last year, about 110 million people flew domestically during November and December, said Dean Headley, an associate professor of marketing at Wichita State University who studies the airline industry. He predicts that 2005 will top last year's turnout.
Trippler said travel is unlikely to be affected by the recent bankruptcy filings of Delta Air Lines and Northwest Airlines. He said past cases have shown that U.S. travelers are willing to fly on bankrupt airlines.
Ed Stewart, a spokesman for Dallas-based Southwest Airlines, said bargains remain available, but he acknowledged that many seats on his airline are sold.
"Bookings are very strong," he said, "but there are still cheap seats out there."
Experts said heavy demand and higher prices are likely to persist into next year.
"Everyone is looking for higher fares on airlines in 2006," said Suzanne Cook, senior vice president of research for the Travel Industry Association of America, during the group's conference call.
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