High Gas Prices Raising Airline Ticket Costs
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WASHINGTON, D.C.(CBSDC) — For many Americans, the lamentation of rising gas costs is nothing new. It’s an everyday reality to see prices at the pump going up.
But now, those looking to get away from it all may encounter further troubles doing so, thanks to gas price hikes that have the potential to curb holiday travel and drive up the cost of plane tickets.
Travel buffs are just beginning to solidify their spring break and summer vacation plans. As they do, comparison shopping may show that such hikes have already started to take their toll on the cost of airfare.
“[R]ising jet fuel costs put significant cost pressure on the airline industry,” Steve Lott, vice present of communications for Airlines for America told CBSDC. “Regarding fuel, it was the airline industry’s largest expense in 2011, representing 35 percent of total costs. In 2011, the price of jet fuel reached a record high of $3.00 per gallon for the year.”
He continued, “It is even higher for the first two months of 2012.”
Cynthia Brough, director of public relations for AAA, said that as jet fuel costs go up in tandem with gas prices, the consumer could expect to pay more for their flight.
“As with any business, if [an airline] pays more for fuel and operational costs, they need to pass that cost on to the consumer,” she told CBSDC. “There have been [similar] effects in the past.”
Though the illegality of price signaling prevents airlines from discussing numbers, Allison Steinberg, senior media analyst for JetBlue Airways, told CBSDC that there are steps taken to try to stave off the potential effects of rising gas prices.
“We continue to believe the best tools for managing the impact of fuel expense are operating a fuel-efficient fleet and using efficient operating procedures, such as single engine taxi,” she said in an email. “In addition, we continue to manage our fuel hedge portfolio as a form of insurance to help mitigate price volatility and protect JetBlue against severe spikes in oil prices.”
It may take more extreme measures for airlines to keep up, though. Lott added that, from the year 2000 to the middle of 2011, jet fuel prices rose 268 percent. In that same time period, domestic airfare costs reportedly rose 10 percent.
“Fares over the past decade have not kept pace with costs or the price of fuel,” he noted.
According to information provided by the AAA National Office to CBSDC, some airlines have already taken such action, replacing larger jets with smaller, regional aircrafts that are more fuel-efficient in nature.
Travel website Expedia.com confirmed that prices have gone up for flights in recent history. However, they additionally stated that ticket sales have increased as well.
“Despite the recent rise in gas prices, Expedia sees people still taking to the skies,” Jeremy Boore, travel analyst for Expedia.com, said to CBSDC. “With regards to flights, on some of the most popular routes, Expedia sees ticket growth outpacing average ticket price growth.”
According to their collected data, tickets between Los Angeles International and John F. Kennedy International Airports in the past 28 days have gone up in price by 1.7%, with sales up 14.1% in comparison with the previous 28-day period.
Other popular routes saw similar rises in both cost and consumption.
“[T]here is still demand for travel, all things considered,” Boore added.
All the same, consumer surveys and data collected last year indicate that some travelers did make the decision to avoid air travel, instead opting to go by car.
American drivers will still have to pay more to vacation, however, statistics offered by the U.S. Energy Information Administration show that, for the week starting Feb. 27, gasoline prices per gallon averaged out at $3.71.
That amount reflects a rise of 13 cents from the previous week, and 33 cents from the same week in 2011.
The past month has also been statistically more expensive at the pump than last February, according to numbers collected by AAA. The data collected and presented by their Daily Fuel Gauge Report shows that on March 1, 2012, the national average for a gallon of gas is $3.74. The same time last year, Americans paid just $3.39 per gallon.
The increase in cost can be attributed to a number of things, including dwindling supplies and increasing demand as summer ticks closer and the politics surrounding crude oil acquisition, especially in the Middle East.
Avery Ash, manager of regulatory affairs for AAA, said that gas prices do tend to rise slightly as March begins and winter draws to a close. But the rise seen recently is atypical in size, due to geopolitical influences.
“Last year … we saw escalating tensions in Libya and northern Africa, and that uncertainty impacted the market – most specifically, the removal of Libyan crude from the market,” he told CBSDC, adding that this year’s recent tensions in Iran have taken their toll as well. “This time of year we do see some upward movement, but the last two years have broken the historical norm in the magnitude of the increases.”
A combination of pent-up vacation desires and years of experience with balancing personal budgets has helped American travelers enjoy some time away all the same, even if they had to change their approach.
“[Travelers] did … budget more wisely, by perhaps visiting national parks for free as opposed to another venue of higher cost,” Brough said. “They changed the type of travel, but they still traveled.”
But as Nancy White, who also directs AAA public relations, observed in their end-of-year holiday travel forecasts from 2011, many Americans will prioritize travel over other expenses, especially if family and friends are involved in the trip.
“The heartstrings outweigh the purse strings,” she said, quoting a colleague. “People will do whatever they need to do to spend time with loved ones, making cuts in other areas of spending to accommodate travel plans.”