06 October 2009

Up ahead for fliers: slowing air fares

With vacation travel over for this year, there are various economic predictions of what’s ahead but one clear trend has emerged: airline fare increases are reaching for the sky.

Cuts in airline capacity will lead to fare increases of up to six percent globally and seven percent in North America, according to the American Express Global Business Travel Forecast.
Other findings:

---Ancillary fees -- those charges to check an extra bag, change a flight or order a cocktail, among other costs -- are also expected to inch up, raising the overall cost of a domestic business trip by 1.2 percent to an average of $1,080, according to the report.

---To cut costs, airlines have reduced capacity by parking planes and cutting back on flights. Because of such changes, flights were, on average, 80.9 percent full in August compared with 79.7 percent full during the same month in 2008, according to the association.

---Airline passenger revenue fell 21 percent in August compared with the same month in 2008 -- the 10th consecutive month of losses from the prior year, according to a study by the Air Transport Association of America, a leading U.S. airline industry group.

---In August, 6% fewer passengers traveled on U.S. airlines compared with the same month last year, while the average cost to fly dropped 17% year-over-year.

"While there are signs that improvement may be on the horizon, regrettably the demand for air travel remains weak," association President James C. May said.

Travel website Travelocity also has detected signs that fares are no longer dropping.

Fares booked for fall travel in mid-September were 14 percent lower than a year ago — down from the 15 percent year-over-year drop in fares in July, Travelocity's bookings show.

Genevieve Brown of Travelocity says indications are that "prices are stabilizing."

By David Wilkening