Why Your Last Flight Was So Expensive Understanding what's driving airfare costs up can help keep you plan ahead and even save a little cash.
By Elaine Glusac •
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Few expenses boil the blood of business travelers like airfares. Airlines are known to make their livings on the backs of road warriors, whose schedules are relatively inflexible and whose travel decisions are often last minute. And these days, not only are there few empty middle seats to mitigate the armrest wars, but airfares appear to be on the rise.
"Prices are flat to slightly above inflation. That's the good news," said Rick Seaney, chief executive officer of FareCompare, an airfare travel planning web site. "But 2012 [the last year for which annual statistics are available] was the highest in a decade so that's the bad news."
Several factors play a role in escalating prices, led by the price of oil, currently more than $100 per barrel. Capacity control has also inflated fares. "If you reduce supply relative to constant demand, then you can push up average fares because then you are not carrying the most price-sensitive traveler," said Seth Kaplan, managing partner of Airline Weekly, a publication that covers the industry. "That's what airlines have basically done. It's a larger industry but there are not more domestic seats in the air."
Finally, industry consolidation is poised to boost prices. With the mergers of Delta and Northwest, United and Continental, Southwest and AirTran and, more recently, American and US Airways, the big four control more than 70 percent of the domestic market. Patrick Surry, chief data scientist at Hopper.com, a trip planning engine and data analysis company that publishes a detailed global flight map displaying average fares, says those numbers aren't in yet, but anecdotally fares are inching up except on competitive routes, such as transcontinental flights. "You can see if you start in Boston, it's cheap to get to the west coast, but more expensive to get to places in the middle of the country," he said. "It's down to the fact that there's more competition and demand for those routes."
Fees for things like fuel surcharges, which don't necessarily rise and fall with actual oil prices, also push up fares. This year, the so-called 9/11 fee that funds airport security will more than double from $5 for a round-trip ticket to $11.20. And the general nickel-and-diming continues. In February, United charged me $6 for a glass of wine en route to Tokyo, a price that went up $1 by the time I returned a week later.
Travelers can better control the optional extras. The big ticket, of course, is a bigger problem. These few rules of thumb will help you save:
1. Travel hungry. "The cheapest times of day to travel are 6am, noon and 6pm -- mealtimes," said Seaney. BYO food on board.
2. Fly on the slowest days of air travel: Tuesdays, Wednesdays and Saturdays.
3. Think ahead, but not too far. "The biggest mistake people make is they don't shop early enough," said Seaney, meaning at least 30 days out. Airlines start managing seats by tinkering with fares three months prior to departure, with few bargains before then.
4. Buy early in the week. "Airlines reset pricing on Tuesdays and Wednesdays and that's the time you may find a bargain that only exists for a few days," said Surry.
5. Consider a secondary airport in a major market. The savings tradeoff: you'll spend more time commuting.
The bottom line is most spur-of-the-moment business travel will cost dearly. In which case, Kaplan of Airline Weekly suggests looking on the bright side. "We now have a more reliable and safer product," he said, noting it's been more than 12 years since we've had a major carrier crash in the United States. "But we're paying for it. We're not getting free meals, but we're getting reliability, safety and punctuality."
