Airline Prices May Rise With Gas Prices

March 8th, 2011 by Mariah

 

Airfares rise with oil prices

By HUGO MARTIN

Los Angeles Times


Airline ticket prices are on the rise again, and even industry experts can’t predict how much higher they will go. All this is making business travel managers very nervous.

For several months, airfares have been pushed up by growing demand and flights’ limited capacity. But the prices have been kept in check somewhat by consumer resistance and competition among airlines.

Now turmoil in the Middle East and North Africa has raised fuel costs, which represent at least 25 percent of airline expenses. Each $1 increase in the price of a barrel of oil results in $1.6 billion in added costs to the worldwide airline industry, according to the International Air Transport Assn.

So it’s not very surprising that the nation’s largest airlines have adopted half a dozen fare increases since Jan. 1.

During the fifth increase, however, the power of competition cut the price hike in half. In late February, major network carriers such as United, Continental, Delta and American raised domestic fares $20 per round trip. But those increases were later rolled back to $10 when low-fare airlines Southwest, JetBlue, AirTran and Frontier raised their prices only $10.

“Airlines can’t afford to be $1 more than a competitor, or they don’t show up on the first page of results” on fare-comparison websites, said Rick Seaney, chief executive of FareCompare.com.

Consumers also have some power over prices, said George Hobica, the founder of travel website Airfarewatchdog.

“The airlines are playing cat and mouse with the consumer: ‘Let’s see how much consumers are willing to take before they say enough is enough,’” he said.

But it’s the rising cost of fuel that has many business travel managers nervous.

In a survey of people who manage travel spending for businesses, more than 90 percent said they were concerned about the effect of rising oil prices on travel costs, with nearly half saying they were “very concerned.” The survey of 472 business travel managers was conducted last week by the Global Business Travel Assn.

BAG-CHECK FEES COST TAXPAYERS

Fees charged by airlines to check luggage are not only costing passengers billions of dollars each year – they are costing all taxpayers money too, Homeland Security Secretary Janet Napolitano said.

During testimony before Congress last week, Napolitano said airline passengers were trying to avoid the checked-baggage fee by carrying more luggage with them on planes. Carry-on bags require more labor-intensive inspections by Transportation Security Administration officers, she said.

“When you have to pay to check a bag it increases carry-on luggage, and that means there is more to inspect at the gate,” Napolitano said during testimony before a Senate appropriations subcommittee on homeland security.

The extra cost to the TSA, she said, is about $260 million a year.

FROMMER’S RATES AIRPORT LOUNGES

With storms wreaking havoc with airline schedules across the country this winter, delayed passengers are killing time at airport lounges. But depending on the lounge, they may not mind the wait.

Frommer’s, the 54-year-old travel guide business, talked with frequent fliers, guidebook editors and others in the airline industry to choose North America’s top 10 airport lounges.

Included on the list was United Airlines’ United First International Lounge at San Francisco International Airport, which Frommer’s said looks like a hotel lobby and offers showers, free drinks and free sushi.

Also among the top 10 was the OneWorld Lounge at Los Angeles International Airport, which is operated by British Airways, Qantas and Cathay Pacific. In addition to nine showers, free liquor and Wi-Fi access, the free food is particularly good, Frommer’s said.

Most lounges are open only to passengers with first- or business-class tickets, but some airlines sell day passes for $45 to $50. Frommer’s praised the ReLAX Lounge at LAX’s international terminal, which is open to all visitors; prices start at $15 an hour.

At ReLAX, non-alcoholic drinks are free, as are cookies, fresh fruit and wireless Internet access.

Said Frommer’s: “It’s a quiet and spacious place to watch the planes taxi around and take off.”

FAA BILL BANS USE OF LAPTOPS IN COCKPITS

After delaying for more than three years a bill to reauthorize the Federal Aviation Administration, Congress appears ready to adopt legislation that would also make several changes in the way airlines operate.

For example: An amendment to the bill could more than double the number of daily round-trip flights between the western U.S. and Ronald Reagan Washington National Airport, to 28 from 12. Long-distance flights into Reagan National have been limited because of noise concerns and an effort to shift more flights to Washington Dulles International Airport.

Airline officials expect nearly half the new flights to take off from Los Angeles and San Francisco.

Debate over how many flights to allow was among several issues that delayed adoption of the bill.

The bill also includes a provision pushed by Sen. Al Franken, D-Minn., to prohibit pilots from using cellphones, laptop computers and other personal electronic devices in the cockpit while flying a plane. The proposal was drafted after two Northwest pilots overshot a Minneapolis airport by 150 miles in 2009 because they were distracted by their laptops.

The bill would also give the FAA the green light to modernize the nation’s air traffic control system, upgrading it from the World War II-era radar system to a GPS-based system that FAA officials say could reduce airline delays by as much as 20 percent.

“In an industry like aviation, standing still or moving backward is not an option,” FAA Administrator J. Randolph Babbitt recently told a congressional committee.

Among other changes, the legislation calls for a study on flight attendant fatigue. The study was requested by flight attendant unions long before a frustrated JetBlue Airways Corp. flight attendant argued with an unruly passenger, cursed that person over the intercom, deployed the plane’s emergency chute and slid down it – beer in hand.

Congressional leaders hope the president will sign the bill by the end of March.

AIRLINES BEGIN TO HIRE AGAIN

After 28 consecutive months of declining employment, the U.S. airline industry is back in hiring mode, a sign that airlines are ready to add routes and flights.

The airline industry reported a 0.2 percent increase in employment in December, the first rise since August 2008, according to the latest data from the U.S. Bureau of Labor Statistics.

“I think the airlines are moving up with the general economy,” said Jan Brueckner, an economics professor at UC Irvine and expert on the airline industry.

American Airlines recently announced that it plans to hire as many as 30 bilingual flight attendants for its new Los Angeles-to-Shanghai route.

The route will serve the growing tourism and business travel markets from China over the next few years as the Chinese middle class grows and travel restrictions ease. The new American hires are in addition to the 568 flight attendants recalled to work by the airline this month.

AIR CARRIERS SEEK WATSON’S HELP

The technology that enabled a supercomputer to beat two former quiz show champions in the first human-versus-computer “Jeopardy!” match might also help airlines operate more efficiently and aid passengers in booking travel plans.

The IBM technicians who built the question-answering computer named Watson say they are talking with several U.S. and international airlines about using the technology. IBM officials declined to name the airlines.

One situation in which a supercomputer could help is if several planes have landed at an airport but only one gate is available. The Watson technology could determine which arriving plane has the most passengers with impending connections so it could be unloaded first, said Raul A. Arce, IBM’s vice president for travel and transportation.

In the next five to 10 years, Arce said, airlines and hotels could also use Watson technology to suggest travel plans for passengers.