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U.S. airfares continue to take off, no relief in sight

Jan. 21, 2014, New York, N.Y. - The price to board an airliner in the United States has risen for the fourth straight year, making it increasingly expensive to fly almost anywhere.


January 21, 2014
By The Associated Press

The average domestic roundtrip ticket, including tax, reached $363.42
last year, up more than $7 from the prior year, according to an
Associated Press analysis of travel data collected from millions of
flights throughout the country.

 

The 2 per cent increase outpaced inflation, which stood at 1.5 per cent.

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Airfares have risen nearly 12 per cent since their low in the depths
of the Great Recession in 2009, when adjusted for inflation, the
analysis showed.

 

Ticket prices have increased as airlines eliminated unprofitable
routes, packed more passengers into planes and merged with one another,
providing travellers with fewer options.

 

Today, 84 per cent of seats are filled with paying passengers, up from 82 per cent in 2009.

 

"Anyone travelling today will know that those flights are full," said
Chuck Thackston, managing director of data and analytics for the
Airlines Reporting Corp, which processes ticket transactions for
airlines and more than 9,400 travel agencies, including websites such as
Expedia and Orbitz.

 

"Just through supply and demand, those fares will
go up."

 

And none of this factors in the bevy of extra fees travellers now
face for checking bags, getting extra legroom or even purchasing a
blanket, meal or pair of headphones. The typical traveller pays an
additional $50 roundtrip to check a single suitcase.

 

Those fees, introduced in 2008 to offset losses from rising fuel
prices, now bring in $3.4 billion a year for U.S. airlines and have
helped them return consistent annual profits for the last four years.

 

Airlines pay just over $3 a gallon for jet fuel, up from $1.89 in
2009. Another $2.7 billion a year is collected in reservation-change
fees, with airlines charging up to $200 to revise an itinerary.

 

"I love to travel, but they're making it more difficult," said Brian
Kalish, a frequent flier from Arlington, Va. "Maybe I've been spoiled
that it used to be so cheap to fly. It just feels like they are charging
more and giving less."

 

The AP reviewed data from 6 million annual flights taken in the U.S.,
analyzing fees and government on-time records along with fare data from
the Airlines Reporting Corp.

 

Jean Medina, spokeswoman for Airlines for America, the airlines'
trade and lobbying group, said over the long-term fares have not climbed
as fast as inflation and that flying "remains a great bargain."

 

"Carriers continue to invest in their products with new planes, new
services and new destinations," Medina said. "It's a great time to fly."

 

Airlines are able to push fare and fee hikes because there is less competition.

 

"You get some pricing power as a result," said airline consultant Robert Mann.

 

A wave of consolidation that started in 2008 has left four U.S.
airlines — American Airlines, Delta Air Lines, Southwest Airlines and
United Airlines — controlling more than 80 per cent of the domestic
air-travel market. Discount airlines such as Allegiant Air and Spirit
Airlines have grown at breakneck speed but still carry a tiny fraction
of overall passengers.

 

"Even with the presence of a number of strong, sizable low-fare
airlines, you are still seeing airfares go up sizably," said Henry
Harteveldt, a travel industry analyst with Hudson Crossing.

 

Starting July 1, fliers will also face higher taxes. The government's
security fee is currently $2.50 each way for a nonstop flight, capped
at $5 each way if a traveller has a connection. This summer, that fee
will be $5.60 each way whether or not there's a connection. The fee hike
is estimated to cost travellers an extra $1 billion a year.

 

Higher fares did not mean better service for passengers last year.

 

During the first 11 months of last year, 19 per cent of flights
failed to arrive within 15 minutes of their scheduled time. That's up
from 16 per cent during the same period in 2012, according to data kept
by the Bureau of Transportation Statistics.

 

The number of flights cancelled in those 11 months also jumped nearly
15 per cent to 81,265.

 

The government has yet to release data for
December, but the numbers won't be pretty. A series of snow and ice
storms led to thousands of additional delays and cancellations.

 

"If we're paying more," Kalish said, "we should get more in return."