Published on Thursday, August 3, 2006

US air fares reach record levels

US air fares took their biggest jump on record, according to the US Department of Transportation (DOT). Rates have now returned to pre-Sept. 11 levels for the first time.

Rates have gone up 10% in the first three months of the year compared to the same period in 2005, said the DOT.

The fare climb was the largest since the DOT set up its air travel price index more than ten years ago. And rates could continue to climb.

“I see no abatement,” Calyon Securities airline analyst Ray Neidl told the Seattle Post-Intelligencer. “That’s showing that there’s more demand than supply.”

One survey showed business fares were up by 18% this year over last year and leisure fares were up 9%.

The airport with the largest increase was Cincinnati, which showed an average 36.6% increase, according to the DOT. One major reason: Delta trimmed flights after its bankruptcy filing in late 2005.

Only three markets  --  Honolulu, Denver and Kahului Hawaii on the island of Maui saw one-year declines in fares.

Last week, Delta Air Lines raised its fares $5 one way or $10 round trip. United matched the hike, making this the seventh industry fare boost this year.

Two major reasons for the hikes: rising oil prices and increased demand.

But even with the recent far hikes, rates are still lower than they were 18 years ago, according to the Air Transport Association.

Report by David Wilkening

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