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Airfares Likely to Keep Rising With Price of Oil

8:51 AM, Mar 4, 2011   |    comments
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Several U.S. carriers - including American, Delta and US Airways- bumped up many domestic fares by $10 a round trip this week, the sixth widespread increase this year, says Rick Seaney of FareCompare.com, which tracks ticket prices.

Meanwhile, most U.S. airlines raised to $400 the fuel surcharge on round-trip tickets to Paris, Frankfurt and many other European cities, up from $360, says Tom Parsons of BestFares.com, which also monitors fares.

With the price of jet fuel continuing to rise as oil has surpassed $100 a barrel, the fast and furious fare changes and surcharges are likely to keep coming.

"I expect even if fuel stays right where it's at or even drops, the airlines will continually hit us with $5 and $10 fare hikes, probably up until the summer months," says Parsons, who suspects fuel surcharges will inch up as well.

Most of the airlines' fare increases this year have stuck. However, carriers rolled some back when competitors didn't follow.

For instance, a price boost last month of up to $120 round trip on tickets most often bought by business fliers was soon scrapped.

Such volatility only adds to travelers' frustrations, especially if they've booked when the price was high. But with so many swings, it's tough to grab a lower fare. And failure to raise prices one week doesn't mean airlines will quit trying.

The latest $10 bump means fares have risen $20 in a week, the same increase airlines initially imposed last week, only to cut it in half when JetBlue and AirTran didn't match, Seaney says.

If an airline doesn't go along, Parsons says, "they just didn't win that week. They'll throw it out and start all over and go with the next one."

Cumulative increases could backfire on the airlines, some analysts warn.

"At some point, the passengers will bolt and decide not to pay the fare and look at a different mode of transportation," says Basili Alukos, airline analyst for Morningstar, the investment research firm.

"At the end of the day," Alukos says, "it's transportation, so there are other modes ... whether it's rail or car or bus."

If that happens, fares watcher Seaney says, ticket prices should finally reach a ceiling.

"Weekly hikes will cease," Seaney says. "Airlines depend on keeping flights packed during a fuel crisis."

 

Charisse Jones, USA TODAY

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