Anyone who's recently had to fill up an SUV's tank knows: gas prices are going berserk. Now imagine if you had to fill 'er up with 5,000 gallons at a time, and you'll understand the pain the airlines are feeling. Crude oil is now running at $56/barrel, a 50-percent rise over a year ago.
"Fuel prices are astronomical and that's an understatement," said Southwest Airlines spokesman Ed Stewart. "You have to do something about that at some point."
Three times in the past month, that's meant raising fares. American, Delta, Continental, United, Northwest and US Airways all signed onto three $10-$20 fare increases over the past month.
"They basically hit the lowest fares, and they ignored higher leisure fares and higher walkup type-business fares," says airfare analyst Terry Trippler of Farefacts.com.
Even JetBlue and Southwest are raising fares. JetBlue bumped their one-way fares up by $4-$5 last week, and Southwest recently bumped up one-way fares by $1-$3 depending on distance. Southwest is in a better financial position than other airlines because they locked in most of their fuel years ago at a low price -- they're currently paying only $26/barrel for 85% of their fuel. But the airline still has to pay the going rate of $56/barrel for their other 15% -- thus the tiny increase.
The fare hikes won't affect extra-low sale fares, but Trippler says you'll see fewer big sales as the year goes on. More sales will be targeted to individual destinations where airlines feel they need to build traffic, he says.
"The huge sales are generally not there, though some airlines will [cut fares] to generate cash flow," he says. "You'll have to keep your ears and eyes open."
US Airways, which many commentators (including myself) wrote off at the beginning of the year, has been trying to generate cash flow like there's no tomorrow -- which there won't be, if they don't put people in their seats. The result: sale after sale, such as their current promotion offering $361 round-trips from Philadelphia to Glasgow, $17 below the nearest competition (www.usairways.com/pro/specials/gla_sale.htm).
I've ridden US Airways several times in the past few months (including just this week), and I've been impressed with the cheer and professionalism of their staff.
"They have come under attack from Air Tran, Jetblue, Independence Air . . . they're fighting back in any way they can," Trippler says.
According to USA Today (www.usatoday.com/travel/flights/2005-03-20-usairways-usat_x.htm), US Airways is even trying to fix their notorious baggage-handling problems. Still, though, I wouldn't check luggage on a connecting flight with US Airways. While transferring planes in Charlotte on Wednesday, I saw a lone, abandoned suitcase sitting out on the tarmac; who knows whether it got to its destination?
In the end, though, sales are just a band-aid on the ever-widening wound caused by high fuel prices. Trippler and the airlines agree: unless some miracle causes oil prices to drop by $20/barrel over the next few months, fares will continue to rise.
"Compared to a year ago, average fares have not risen enough yet to offset the additional expense incurred by high fuel prices," says Barry Biffle, senior vice president of marketing at low-fare airline Spirit, which is always loathe to hike prices. "Our advice to travelers is to make your travel plans early and jump on low fares now. We can't guarantee fares won't continue to go up if fuel prices stay this high."
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