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Air Travel Forecast: Expensive, Partly Crowded

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The friendly skies are likely to get more crowded and expensive in the months to come, as airlines struggle with sky-high fuel bills. Industry observers say unless oil prices drop sharply, more airlines will have to ground flights and raise ticket prices.

On a recent afternoon at San Diego's Lindbergh Field, the airport was filled with vacationers wearing sunglasses and toting knapsacks. Hardly anyone carried a briefcase. The crowd was a testament to the democratization of air travel — something veteran travel agent Thomas Marks of San Francisco says the airlines have encouraged.

"In years past, the airlines have had fare wars for the summer months where they were trying to lure vacation travelers onto airplanes," Marks said. "One would try to outdo the other to see who could get to the lowest, rock-bottom fare."

But this year, instead of coming in for a landing during the summer months, ticket prices have taken off.

Faced with soaring fuel bills, airlines have raised fares about a dozen times so far this year, including one increase just before the Memorial Day weekend.

Ordinarily, such price hikes might have led to a drop in business for the airlines, especially in a soft economy. But aviation economist David Swearinga says passenger traffic barely budged.

"I think that one of the main reasons for that is that airline prices, even though they were up, they were up less than the cost of gasoline," Swearinga says. "So relatively speaking, air travel was still a bargain compared to driving your car."

If you don't count taxes, Swearinga says, the average airline ticket works out to about 14 cents a mile. "And that's well below what it would be even in your Honda," he says.

Unfortunately, that price is also well below what the airlines need to pay their fuel bills.

Swearinga estimates that if oil prices stay in the $125-a-barrel range throughout the year, airlines would have to raise revenues by 25 percent, just to break even. That means ticket prices would have to go up even more — since eventually higher prices are bound to mean fewer tickets sold.

Other than raising fares, many airlines are expected to cut costs by cutting back on the number of flights they offer, following the lead of American Airlines, which plans to park up to 85 planes later this year. Discount carriers are also cutting back. JetBlue says it will postpone the purchase of 21 new jets.

With fewer flights, airlines save on fuel, labor and maintenance costs. Swearinga says they can also charge more for the flights they do offer.

"If you're offering fewer seats, you don't need to discount as much to fill those seats," he says.

In addition to those changes, airlines are adding more fees for checked bags, meals and other services that used to be included in the price of a ticket.

Frontier Airlines even raised the fee it charges hunters for stowing antlers in the cargo hold. The ticket for that trophy rack has gone from $75 up to $100.

Travel agent Thomas Marks says that it's not yet clear just how many flights will eventually be cut or how much ticket prices will rise. But costly crude oil, he says, is threatening the idea that flying is within everyone's reach.

"As the months wear on, if oil prices stay where they are, you're going to see fewer and fewer leisure travelers," Marks says.

Business people will also be forced to cut back on travel, he says. Just as some vacationers decide to stay closer to home this summer, frequent business travelers may opt for a conference call instead of a face-to-face meeting.



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