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Getting home for the holidays will cost more soon
U.S. largest airlines are boosting holiday-travel surcharges to tinker with prices
By MarketWatch

Page 15
2009-11-24 01:28 AM
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Teacher Jodie Hogan, center, hands out the boarding pass to her students of South River High School for their trip to Peru at Reagan National airport in Washington, D.C on Saturday.
Associated Press
Holiday flights are more expensive this year thanks to ever-increasing surcharges on top of rising ticket costs and baggage fees.

U.S.'s largest airlines already have boosted the holiday-travel surcharges they first announced in September. Plus, they've added another 31 dates next year - for a total of 41 days - when the extra fees will be in effect.

"Airlines like these surcharges because it lets them tinker with their prices," said Rick Seaney, chief executive of FareCompare.com. "It's really hard for airlines to raise base airfares because people quit buying tickets."

It's also cheaper and easier for airlines to tack on fees rather than raise prices because fare changes must be reported to an industry clearinghouse - and that costs money.

For holiday travel, travelers can expect to pay a US$20 surcharge - that's doubled since September - for travel on 10 days in December. Most of those dates are before and right after Christmas and New Year's Eve.

There are other costs, too. Baggage fees are higher on some airlines, as are flight-change fees. Plus, airfares have spiked as the holidays approach, though many fares will rise and fall based on the day of the week you fly as well as the day of the week you buy.

While many fares are still 2 percent to 4 percent less than what they were a year ago, the gap is closing quickly, said Tom Parsons, chief executive of BestFares.com. Since late summer, Parsons estimates that fares are up 50 percent on average and substantially higher than that on some routes. A roundtrip, nonstop flight he booked from Dallas to Tampa, for example, cost US$268 in August. A month later, that same itinerary cost US$238. Yesterday, it's US$768.

A roundtrip, nonstop flight from Chicago to Los Angeles from Dec. 23 to Dec. 27 would have cost US$385 if purchased on Nov. 17, said George Hobica, founder of AirfareWatchdog.com. On Friday, that same trip was US$425, 10 percent higher in only three days.

"A US$10 surcharge is such a drop in the bucket compared to what they're charging over the normal fares," Hobica said. Fees add "insult to injury but it's not the injury."

Next year, expect more fees. For example, travel on Feb. 8 will cost an extra US$50 for people leaving from Miami, Ft. Lauderdale or West Palm Beach airports on United Airlines, American Airlines, Continental Airlines, Delta Airlines and Northwest Airlines. Why? Because that's the Monday after the Super Bowl, which is in Miami next year. That's typically one of the heaviest flying days of the year.

Plus, those five airlines have added US$10 surcharges on all flights over Easter weekend, April 1 to April 4. On April 5, a Monday, passengers can expect to shell out US$30 extra. US Airways is skipping the special-dates surcharge in favor of adding an extra 5 percent for all flights beginning May 8 through September.

The laws of supply and demand are kicking in for airlines this year compared to last year, when the economy was tanking and consumers were mostly staying grounded. With so many empty seats last year the industry was scrambling to fill flights with deep discounts.

This year, there are fewer planes in the air. The number of domestic flights was 4 percent lower in October than in September - that's 31,691 fewer flights. That led to a 5 percent drop in seats, or 3.5 million fewer seats, according to OAG Aviation, an industry global data and information business.

That's on top of as much as 10 percent capacity pulled out of the air in 2008.

As anyone who has flown recently can attest, many flights are packed and often overbooked. But because business travel hasn't returned strongly, airlines are relying on price-sensitive leisure travelers. As a result, these full flights aren't making as much money as they used to.

 
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