SFGate: Wanna get away? Bring more money/As Southwest Airlines passengers get dinged by higher fares, other carriers arrive at the decision to raise their prices, too

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Saturday, July 14, 2007 (SF Chronicle)
Wanna get away? Bring more money/As Southwest Airlines passengers get dinge=
d by higher fares, other carriers arrive at the decision to raise their pri=
ces, too
David Armstrong, Chronicle Staff Writer


   To paraphrase an old television ad: When Southwest Airlines speaks, peop=
le
listen.
   Long the leading low-fare carrier in the nation, Southwest -- citing high
fuel prices -- raised its fares this week. Other major carriers, seeing
that fares were rising on Southwest and knowing they would not be undercut
by the discount king, followed suit.
   Southwest raised its unrestricted walk-up fares from $1 to $10 per
departure, with the larger increases coming on flights of 2 1/2 hours or
more. United Airlines, American Airlines and Delta Air Lines quickly moved
to tack on similar increases.
   In a few cases, Southwest's year-over-year increases are higher than a f=
ew
bucks. A one-way weekday ticket from Oakland International Airport to
Seattle-Tacoma International Airport, for example, costs $129 this year;
it was $99 last summer.
   With the discount leader raising the floor on cheap tickets, and airlines
flying full planes, it's getting harder to find a bargain air fare for
summer travel. Government and industry data haven't caught up to the
summer trends, but industry pundits and many travelers say they're paying
more. Analysts say a price break won't come until autumn.
   With the price for a barrel of crude oil around $70, even Southwest -- t=
he
only major U.S. carrier to remain consistently profitable during the past
few years -- is seeing its margins shrink and is raising fares, Marilee
McInnis said. "It's all about the fuel," she said. "It's a constant uphill
battle."
   Southwest's fare increases seem to be rippling through the aviation
market.
   "I have been struggling this summer to get a good fare to Canada," Trist=
an
Herkimer of Oakland wrote in an e-mail to The Chronicle. "I am
experiencing some frustration on rates. It is much more expensive than
last year -- about 25 percent more."
   Last week's fare increase was the second in recent months and follows on=
es
in 2006 by Southwest and others. Higher ticket prices are just the latest
frustration for fliers. Numerous delays and cancellations and long,
well-publicized waits aboard planes on the tarmac have already made this a
difficult summer.
   Even so, Americans are flocking to airports, lifted by a strong economy.
According to the Air Transport Association, an industry trade group, a
record 209 million passengers will fly this year between Memorial Day and
Labor Day.
   No incentive for discounts
   In the aftermath of the Sept. 11, 2001, terrorist attacks and the
recession early this decade, airlines reduced the number of flights,
parked unused aircraft in the desert and substituted smaller planes for
large jetliners on many routes. These moves make it easier for U.S.
airlines, which collectively lost $40 billion from 2000 to 2005, to fill
their planes now.
   "The average price of a ticket is going up, but it's a matter not so much
of the airlines raising fares as becoming more aggressive about managing
the number of seats sold at deep discounts," said Henry Harteveldt, vice
president and principal analyst in the San Francisco office of Forrester
Research.
   "Airlines are flying planes 80, 85 and 90 percent full," Harteveldt said.
"They don't have an incentive to offer many discounted tickets. An airline
executive told me he and his colleagues can't find free seats to fly for
business on their own airline with their passes."
   The latest fare increase occurred a little over a month before Southwest
-- the largest carrier at both Oakland International Airport and Mineta
San Jose International Airport -- plans to resume service at San Francisco
International Airport on Aug. 26 following a five-year lapse.
   Southwest will offer low, temporary promotional fares to entice fliers.
One-way tickets, before taxes and fees, will be $39 from Oakland to San
Diego, for example, and one-ways from Oakland to Las Vegas will go for
$59, with 21-day advance purchase.
   But unlike Southwest, many airlines are still struggling to earn profits
and, for them, even offering temporary breaks on tickets poses a risk.
   Cecilia Wu of San Francisco, recalling a recent trip she took to China,
experienced some sticker shock. "The price sure went up," Wu wrote in an
e-mail to The Chronicle. "Last summer, it was about $700 to $800 on
round-trip tickets on United between San Francisco and Shanghai. This
year, it is $1,045."
   United, the dominant carrier at SFO with nearly half of all passengers a=
nd
flights, has suffered two consecutive money-losing quarters and, like
Southwest and other airlines, blames stubbornly high fuel costs for
increasing operating expenses.
   All told, operating costs for major U.S. carriers went up 10.6 percent in
the first quarter, driven by the price of fuel, according to the Air
Transport Association.
   Because airline fares are so volatile and prices vary so much from route
to route, even airline experts disagree about how much fares have risen
overall -- or even if they have.
   Harrell Associates, a New York firm that tracks fares to 15 major U.S.
markets, reported that domestic leisure fares to and from SFO on July 2
were 4 percent lower than on July 2, 2006, while business fares were about
the same.
   Nationwide, air fares are up this summer "by an average of 6 or 7
percent," according to Terry Trippler, an airline expert in
Minneapolis-St. Paul, who does his own analyses of published fares.
   "Airlines," he said, "are raising fares because they can, and because th=
ey
want to. They can manipulate the number of discounted tickets on every
flight, but with planes flying so full, they don't sell many seats at
bargain prices. You and I could get into Fort Knox and play with the gold
bars before that will happen."
   But while planes are packed and fares are up on many routes, some bargai=
ns
should be available after Labor Day, when the domestic market typically
turns soft, travel pundits say.
   Again, it may be Southwest that shows the way. Last week, Southwest
announced a fare sale for travel from Aug. 16 through Jan. 11, 2008.
Flights must be booked by July 26.
   Some routes competitive
   Even now, before summer ends, decent fares can be found by travelers who
take advantage of occasional deals on the Internet, and by those who
choose to fly on routes served by competing airlines, said Chris McGinnis,
editor of Expedia Travel Trendwatch.
   "With airlines flying 90 to 100 percent full on most routes, there is
little incentive for airlines to offer significant discounts this summer,"
McGinnis said. "However, where there is new competition, you'll find
deals. For example, with JetBlue offering nonstops between SFO and Salt
Lake City, Delta recently offered last-minute, Web-only fares of $59 each
way. Not a bad deal at all for a quick summer break in the Rockies."
   To really save money -- and avoid the crowds, flight delays and other
hassles of the peak travel season -- travelers may simply have to wait
until after the dog days of summer.
   "Right now, it's fly the ugly skies, but then we get into fall, when
schools are back in session and consumer demand no longer exceeds airline
supply," Bestfares.com's Tom Parsons said. "You should be looking now, and
not waiting. It will still be a tough ticket at Thanksgiving and
Christmas, but if you're willing to be flexible, you will do OK this
fall."

   E-mail David Armstrong at davidarmstrong@xxxxxxxxxxxxxxx ---------------=
-------------------------------------------------------
Copyright 2007 SF Chronicle

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