Fuel costs shoot airfares sky high

Article by: STEVE ALEXANDER and JOHN EWOLDT , Star Tribune staff writers
Updated: March 4, 2011 - 8:54 AM

Many travelers are grudgingly accepting the increases, but how long will it last? Leisure travelers will likely be the first to scale back.

30
comments
resize text
print
buy reprints

Tweet
share

email
Email share

your name

your email

recipients email

+ add a comment add a comment

The cost of flying keeps rising, as airlines again hiked ticket prices on Thursday, the sixth increase of the year for most major carriers.

So far, fliers have grudgingly accepted the price increases, though many experts are wondering if some travelers -- particularly vacationers -- will soon reach their breaking point.

Airlines blame the rising fares on a 25 percent jump in the price of jet fuel since January, when turmoil erupted in the Middle East. Among the latest fare increases, American Airlines raised prices $10 per round trip in the continental United States and Delta Air Lines boosted prices $10 to $20 per round trip.

"Yes, the price increases are about fuel, but the airlines are also putting in fare increases because they can -- and people are buying it," said Terry Trippler, a Twin Cities airline analyst who runs the website AirlineRulesToKnow.com.

Those hardest hit by fare increases may be travelers at Minneapolis-St. Paul International Airport, who have already endured some of the highest ticket price increases in the nation, according to federal data. Average domestic fares rose nearly 22 percent at MSP -- the nation's fourth-highest percentage increase in the top 100 cities -- from the third quarter of 2009 to the third quarter of 2010, according to the most recent data from the Bureau of Transportation Statistics.

The only airports with higher increases were Newark-Liberty, N.J.; Charleston, S.C., and Burlington, Vt.

Experts say some of the fare increases at MSP were due to the merger of Delta and Northwest Airlines rather than a rise in fuel prices. But because the new ticket increases are across the board, local travelers are getting a double whammy.

In addition, international travelers are paying fuel surcharges averaging $360 per round trip. Domestic travelers aren't being charged those fees -- yet.

If fares rise much more, some business travelers said they won't know where else to cut and still fly. Matt Katzenbach of Lebanon, N.J., already feels strapped. "I'm already flying low-fare carriers with one or two stops and using only carry-ons," he said Thursday, as he waited for his flight at MSP. "Now they charge me an extra $22 for a window seat."

Political upheaval

The price of jet fuel is tied to world oil prices, which have skyrocketed as a result of political revolutions in the Middle East that have caused uncertainty about future oil supplies. The Air Transport Association, a trade organization for airlines, predicts that jet fuel will cost U.S. airlines an extra $15 billion in 2011, a 39 percent increase over last year's jet fuel bill of $38.8 billion.

Still, domestic airlines are coming off a stellar year, with many doling out profit-sharing checks to workers for the first time in years. Overall, North American airlines showed a profit of about $4.7 billion last year.

Marilyn Albers of St. Cloud goes to Scottsdale, Ariz., every year with her sisters and has no plans to change that routine. She paid $325 for a round trip this year but said even a $400 or $500 fare wouldn't ground her. "I'd still fly," she said. "I'm not interested in taking a bus or train."

Experts say the airlines probably will keep raising ticket prices this year until travelers say enough and cut back on air travel. But so far, there are no signs that leisure or business travelers are flying less. To some extent, that may be because the fare increases coincided with an upsurge in business air travel that began late last year.

"We don't see any signs of a cutback in business travel," said Diana Waltz, a corporate account manager with the Travel Leaders location in downtown Minneapolis. "Demand for travel is outweighing what's happening with oil prices."

First to scale back

Leisure travelers will likely be the first to scale back as prices rise, opting for driving vacations instead of flying. Just don't expect them to stay home, Trippler said.

"The 'staycation' was a flop," he said. "People might cut back in other areas, but they still want to travel, even if it means driving to Fargo, Des Moines or Sioux Falls."

Indeed, Steve Nickels of Madison, Wis., flying out of MSP on business on Thursday, said he could be just as happy doing the Dells instead of an exotic locale. "It's still spending time with my family."

At what point does the higher price of an air fare become a dealbreaker? For Lezlie Cebulski of Detroit, who was traveling through Minneapolis on business Thursday, a 20 percent hike would get her attention, but at 30 percent, leisure travel could be grounded.

"We've already cut back on the bags we check," she said, referring to sometimes hefty baggage fees airlines charge. "If it means we drive north to a cabin more often instead of taking a cruise, we'll do it."

alex@startribune.com • 612-673-4553 jewoldt@startribune.com • 612-673-7633

related content
The price of jet fuel is tied to world oil prices.

Richard Tsong-Taatarii, Star Tribune
Marilyn Albers, Pam Berling

Bruce Bisping, Star Tribune
Travelers at MSP

Bruce Bisping, Star Tribune
Bluer skies ahead for Sun Country?

Thursday March 3, 2011

Private investors appear ready to buy the Twin Cities-based low-fare airline.