August 29, 2011

August 29, 2011
3 Reasons Airfares Can Go Up

Welcome to another day in my life. Today is Monday and I hope you had a safe and great weekend. I know for many people on the east coast it was a very long weekend because of Hurricane Irene. We have been keeping all of you in our thoughts and prayers.

The past two days I have been telling you how to save money when flying. Well what about saving on the cost of the tickets themselves?

Let's face it, boys and girls, the chances of getting a deal on airfare this year are slim. The airlines have already hiked airfare prices six times this year. To put it in perspective, last year the airlines raised prices four times the entire year, so you know we are in for a rough time, especially since it is just now summer.

If you are scratching you head as to why prices are going up, let me shed some light on the subject.

1. Fuel prices

The number one reason why airlines are raising their airfares this year is because the price of fuel, as of this writing, is hovering at around $100 a barrel.

If you think that world events do not affect you, think again. The main force driving up these prices is the unrest in the Middle East and North Africa. In order to keep their profits steady, the airlines passes on the higher fuel costs to passengers by imposing fuel surcharges.

Most airlines, including legacy airlines such as American Airlines and budget airlines such as Southwest, recently placed a $10 surcharge on all domestic round trip airfares. Fuel surcharges are even greater on international flights. JetBlue, for example, added a $45 one way surcharge to its flights to the Caribbean. So not only are you going to feel the pinch at the pump, you will feel it in the skies as well.

2. Decreased capacity and routes

For the last two years, the airlines have steadily been grounding hundreds of planes, reducing their fleets by around 8 percent.

And this year carriers such as Frontier Airlines, American Airlines and Delta all announced they would continue the trend by either further cutting capacity or keeping capacity static. Not only does grounding flights get fuel guzzling aircrafts out of the air, but it also helps keep demand high despite rising airfare costs. Plus, the airlines are pulling flights from low yield routes or routes that do not make a lot of money per seat. That means fewer choices and higher prices on many nonbusiness travel routes.

3. Demand is still high

Though airfare has been rising, the thirst for travel has not gone down. The improving economy has been keeping travel steady despite costs. Last year for example, there were five consecutive holiday travel periods that saw an increase in fliers over 2009, according to reports by automobile club AAA. This year travel is expected to go up as well, but with prices skyrocketing there's going to be a point when the price will dissuade travelers from taking that flight.

I hope this helps you when planning your next trip.

Until we meet again; here's wishing you health, hope, happiness and just enough.

big bear hug,

Daddy Dab