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US travelers becoming victims of rising fuel prices
US airline travelers will be the next victim of rising fuel prices that are also threatening to stall the recovery of the airline industry, analysts say.
Rising gas prices have so far not seriously deterred motorist travel within the US, according to a recent AAA study, but that’s also a possibility as prices continue to rise this summer.
Several airlines including American, United, Continental, Northwest and Delta all recently raised one-way domestic fares by $5.
But with predictions of oil prices reaching $70 a barrel this summer, analysts say consumers should brace for even higher prices.
Oil traded at around $30 during the start of the year.
Airline prices have already risen 10 to 15% in the past year. “Fare prices are likely to go higher still, perhaps a lot higher,” said USA Today.
Fuel accounts for about 14% of average airline expenses, according to industry figures.
Look for a prolonged period of more fare increases, fewer fare sales and more limits on the amount of tickets sold at the lowest price, predicted Andrew Winterton, a consultant with American Express Business Travel.
“Those of us who have become accustomed to wonderfully low fares can say sayonara to them this summer as planes fill and higher fuel costs open the door to the airlines to raise fares at will,” wrote The Daily Traveler.
Said Air Transport Association chief economist John Hemlich in a recently released statement:
“Record crude oil prices, which are expected to average nearly $70 a barrel this summer, will hamper the industry’s widespread efforts to reverse the losses that have plagued the airlines in recent years.”
Report by David Wilkening
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