Fliers pinched as airfares take off; blame fuel, mergers, profits
— -- Bill Catlette has a new rule of thumb for his business trips. If the destination is 500 miles away or less, he'll hop behind the wheel instead of fly.
Recently, Catlette, a business consultant, drove even farther, when he found out a round-trip flight from Memphis to Jacksonville would cost $900 for a seat in coach.
"They're totally putting the squeeze on us," Catlette, who regularly flies out of Memphis, says of Delta, the city's dominant airline. "It's not that I like driving that much, but at some point, it's nuts. At least I don't have to take my shoes off."'
Fares were up this year, from facilities such as Memphis International Airport to Atlanta's Hartsfield-Jackson to Boston's Logan. Don't expect them to drop any time soon.
The volatile price of jet fuel, multiple airline mergers that have winnowed competition and a determination by carriers to not offer more seats than there are passengers to fill them have let airlines boost prices and their bottom lines.
"While nobody wants to pay more for anything, including airline tickets, we have to remember that airlines are businesses," says airline and travel analyst Henry Harteveldt. "They're going to do whatever they can to earn a profit."
But federal transportation data show the number of passengers flying U.S. carriers dipped 0.3% between May of last year and May 2012. Fare watchers say that indicates some fliers may have had enough.
"I think leisure travelers have been pushed to their breaking point in the current economic conditions," says Rick Seaney, of FareCompare.com, which analyzes ticket prices. "Airlines are on that bubble, where adding another couple of bucks is going to hurt demand."
Inflation changes picture
When adjusted for inflation, airfares are actually lower than they were in the mid- to late 1990s. But many fliers, who'd grown used to steep discounts during the depths of the recession, are now suffering a bit of sticker shock as airlines try to make up lost ground.
"I haven't seen a domestic flight below $600 in forever," says Jeff Pearce, of Fayetteville, Ga., who owns his own business. He drives when he can for business and vacation.
Average domestic fares increased 4.8% in the first three months of 2012 compared with the same period last year, according to the Transportation Department's Bureau of Transportation Statistics. Adjusting for inflation, that's 2.1% higher than last year and 10.1% higher than in 2009.
Among the largest 100 airports in the U.S. (excluding Alaska, Hawaii and Puerto Rico), Flint, Mich., saw the biggest increase, with the average domestic fare jumping 23.7% in the first quarter compared with last year, according to the most recent data available from the Bureau of Transportation Statistics.
Other airports in the top 10 include Cincinnati, which had the highest average domestic fare in the nation, at $526.25, and where ticket prices rose 13%, and Pensacola, Fla, which had a fare bump of 15% to $446.70 on average.
In a market such as Cincinnati, a large number of premium-paying business trekkers is likely a key reason for higher average fares, transportation analysts say. But the high cost of fuel has lifted fares in many cities across the country.
