NOAH ADAMS, host:
From NPR News, it's ALL THINGS CONSIDERED. I'm Noah Adams.
We begin this hour with the impact of high oil prices for drivers, and first for airline passengers. Because of huge fuel bills, the friendly skies are expected to become even more crowded and more expensive. Industry observers say unless oil prices drop sharply, more airlines will have to ground flights and raise ticket prices.
NPR's Scott Horsley reports.
(Soundbite of P.A. system)
Unidentified Woman: Once again, ladies and gentlemen, (unintelligible) gate area...
SCOTT HORSLEY: It's mid-afternoon at San Diego's Lindbergh Field, and the airport is filled with vacationers wearing sunglasses and toting knapsacks. Hardly anyone here is carrying a briefcase. The crowd is a testament to the democratization of air travel. Veteran travel agent Thomas Marks of San Francisco says the airlines have encouraged this.
Mr. THOMAS MARKS (Travel Agent): In years past, the airlines have had fare wars for the summer months, where they were trying to lure vacation travelers onto airplanes. One would try to outdo the other and to see who could get to the lowest rock-bottom fare.
HORSLEY: This year, though, 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.
Mr. DAVID SWEARINGA (Aviation Economist): I think that one of the main reasons for that is that airline prices, even though they were up, were up less than the cost of gasoline. And so relatively speaking, air travel was still a bargain compared to driving a car.
HORSLEY: Swearinga says if you don't count taxes, the average airline ticket works out to about 14 cents a mile.
Mr. SWEARINGA: And that's well below what it would be even in your Honda.
HORSLEY: Unfortunately, it's 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 ticket sold.
Besides raising fares, many airlines are expected to cut 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. Jet Blue 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.
Mr. SWEARINGA: If you're offering fewer seats, you don't need to discount as much to fill those seats.
(Soundbite of P.A. system)
Unidentified Man: Please keep your luggage and all packages with you at all times till they are checked.
HORSLEY: Airlines are also adding more fees for checked baggage, 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 the trophy rack has gone from $75 to $100. Travel agent Marks says it's not yet clear just how many flights will eventually be cut or how much ticket prices will rise. But he says costly crude oil is threatening the idea that flying is within everyone's reach.
Mr. MARKS: As the months wear on, if oil prices stay where they are, you're going to see fewer and fewer leisure travelers.
HORSLEY: Marks says business people will also be forced to cut back on travel. Just as some vacationers decide to stay closer to home this summer, frequent business travelers may opt for a conference call.
Scott Horsley, NPR News, San Diego.
NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR’s programming is the audio.