Brace For Higher Ticket Prices
May 03-- Reduced competition, higher fuel prices and rising demand are propelling airfares as the average round-trip U.S. fare rose to $368 in 2011's fourth quarter, a 10 percent increase from a year earlier, government and industry officials said.
In a survey of the nation's top 100 airports, the Department of Transportation's Bureau of Transportation Statistics found Cincinnati had the highest average fare, $502, while Atlantic City, N.J., had the lowest, $189.
Tulsa had an average 2011 fourth quarter fare of $412, which was 14.5 percent higher than a year earlier, the federal agency said. Tulsa International Airport ranked as the 20th most expensive airport in the nation to fly from.
Oklahoma City ranked as 28th most expensive city for airfares, with an average fare of $400, up 8.8 percent from 2010's fourth quarter.
Among other cities in the region, Dallas-Fort Worth's average fare was $421, a 6.7 percent increase from a year earlier, ranking 15th most expensive.
Memphis, Tenn., ranked third in the survey, with an average fare of $484, up 20 percent from a year earlier.
Wichita's average fare was $403, up 16.8 percent, ranking 26th, while Little Rock ranked 41st, with an average fare of $380, up 7.3 percent.
Alex Eaton, president of World Travel Service in Tulsa, said he isn't surprised by the industry's and Tulsa's relatively high fares.
"Less seats and more demand means prices will go up," he said. "The pricing bottomed out in the first quarter of 2009, and we've been on the rise ever since."
Alexis Higgins, deputy airports director of marketing at Tulsa International, said airfares are up in Tulsa because fewer airlines are flying and it is primarily a business travel market.
"Business travelers tend to make reservations at the last minute, and they have more demands as to scheduling of their trip," Higgins said. "Fares are higher here also because of the carrier base. We have four airlines -- American Airlines, Southwest Airlines, United Airlines and Delta Air Lines.
"We don't have an Allegiant or AirTran, an airline that could provide basic low-cost service."
The federal agency said average fares for the full year 2011 were the highest on record at $364, up 8.3 percent from 2010. The 2011 fares were up 5.2 percent from 2008, which at $346 was previously the highest year on record since 1995, not adjusted for inflation, the agency said.
Adjusting for inflation in 1995 dollars, fares in 2011 averaged $247, up 4.9 percent from 2010 but down 17.6 percent from the inflation-adjusted high of $300 in 2000, the agency said.
Fares are highest in Cincinnati because only American, United and Delta fly there, said Nancy Winn, a travel agent with Travel Leaders/Spears Travel in Tulsa.
"You don't have Northwest (Airlines, which merged with Delta) there anymore, and United and Continental are merging," Winn said. "Because your competition is cut down, your airfare is raised."
Winn said the same factors are at work in Tulsa, which lost both Frontier Airlines and MLT Vacations, a charter airline, in recent years.
"Fares will stay steady or go higher," Winn said. "A lot depends on what happens to (bankrupt) American (Airlines) and if another airline comes in."
Fuel prices are the final piece of airfare escalation, industry executives said, and fuel prices have risen and stayed high for years.
The cost of jet fuel is typically an airline's largest cost center, said John Heimlich, chief economist for Airlines for America, the industry trade group formerly known as the Air Transport Association.
"Annually, a 1 cent increase in a gallon costs U.S. airlines $175 million; a $1 increase in a barrel costs them $415 million," Heimlich said. "When jet fuel prices rise rapidly, airlines have limited options to mitigate these costs, principally generating more revenue or decreasing non-fuel expenses.
"As fuel prices increase, flights become less profitable so airlines also may reduce capacity, and some carriers already have reported downward growth planes."
Eaton, president of the state's largest corporate travel agency, is advising his clients to brace for higher airfares.
"This is the beginning, not the end, of higher prices," Eaton said. "We're going to see airfare increases steadily over the next eight to 10 quarters. We have been seeing it for the last four quarters."
By the numbers
U.S. average
round-trip airfares fourth quarter 2011
(national ranking) % change from
fourth quarter 2010
Tulsa $412 (20) +14.5 percent
Oklahoma City $400 (28) +8.8 percent
Dallas/Fort Worth $421 (15) +6.7 percent
Wichita $403 (26) +16.8 percent
Kansas City $333 (76) +9.7 percent
St. Louis $340 (73) +8.7 percent
Little Rock $380 (41) +7.3 percent
U.S. average $368 +10 percent
Top five highest average U.S. airfares
Cincinnati $502 (1) +17.4 percent
George Bush Houston $494 (2) +16.2 percent
Memphis $484 (3) +20 percent
Washington Dulles $474 (4) +13.3 percent
Newark Liberty $474 (5) +2.9 percent
Source: Department of Transportation, Bureau of Transportation Statistics
D.R. Stewart 918-581-8451
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