High gas prices are pushing up airfares.
The skyrocketing price of gas has everyone complaining when they go for a fill-up, but this pain at the pump also threatens to put a serious crimp in Americans’ summer vacation plans. Some major airlines are already raising their ticket prices in response to the higher cost of fuel, and experts predict these higher prices could stick around even if the price of gas creeps down between now and then.
“When energy prices are headed upward in future months… airfares follow,” industry consultant Robert W. Mann says via email. Thanks to consolidation among carriers and sharp cutbacks in the number of flights, airlines have more pricing power and they can pass along increases in fuel costs more quickly to customers.
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As per the Chicago Tribune, this is already happening, with legacy carriers raising ticket prices by $4 to $10 each. So far, low-fare airlines haven’t followed suit, but if the price of oil keeps increasing, they may have no choice.
Airlines were badly burned in 2009 following the credit crunch and drop in business and leisure travel. They slashed prices just to fill seats, and one perk of an otherwise dismal economic year was affordable airfare to many destinations. Unfortunately for deal-seeking travelers, airlines learned from their mistakes. They sharply cut capacity — which, by the way, is why it’s so hard to cash in frequent flyer miles for a ticket nowadays — in order to avoid selling seats at bargain-basement prices.
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When the economy began to recover and both road warriors and vacationers began booking flights again, airlines stuck to their slimmed-down schedules. Planes got more crowded even as prices crept up. At the same time, airlines also started pulling down big bucks for ancillary fees on everything from choosing a seat to checking a bag.
Bottom line: It’s a seller’s market for flights, and airlines are very aware of that. Even if the price of gas reverses its recent climb, one expert says that might not do much to push prices down.
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“If oil were suddenly 30 to 4o percent less I think you’d see some easing, but if the capacity’s already booked airlines will happily pocket the money they’ve already taken in,” says George Hamlin, president of Hamlin Transportation Consulting. Hamlin says that aside from being flexible with your dates and the time of day you travel, or exploring alternate airports, there’s not a lot travelers can do this summer to score a cheap seat.
“People are going to get less for their travel dollars than they did before,” he says.