High fares to cut into summer air travel

An industry group says fewer passengers will fly, but planes will still be crowded because of reduced flights to save money as fuel costs rise.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)

NEW YORK (CNNMoney.com) -- Fewer people will fly this summer, according the Air Transport Association, and those who do should expect higher fares and crowded flights.

"I think that a rise in fares is inevitable," said James May, president of the industry group ATA, speaking at a press conference in Washington, D.C. Tuesday.

May blamed soaring fuel prices. The ATA estimates that jet fuel costs will rise to a record-breaking $59.5 billion in 2008, compared to $41.2 billion in 2007. The cost of fuel currently makes up 36.5% of the price of a ticket, compared with 15% in 2000, according to the ATA.

May would not estimate how much he expects fares will rise. But Philip Baggaley, fixed income analyst at Standard & Poor's, said the airlines won't be able to push them up much further.

"We believe that it's going to get harder and harder to increase fares because of the weak economy and the fact that there have already been a series of fare increases," he said.

Delta (DAL, Fortune 500), United Airlines (UAL) and American Airlines (AMR, Fortune 500) announced their most recent fare increase, of an additional $20 for a roundtrip ticket, on May 8.

May, the ATA president, blamed the weak economy, fuel prices and capacity cuts for the projected reduction in passengers. He projected the number of passengers to drop this summer to 211.5 million, from 214.2 million during the June-to-August period last year. At the same time, he expects planes to be 85% full because of reduced capacity.

The airline industry is scaling back flights and grounding planes to try and save money, but the skies are still crowded. To alleviate congestion, May said the ATA is trying to get access to military airspace on the East and West coasts

At the same meeting, Greg Principato, president of the Airports Council International-North America, said that bad weather is a top culprit in delaying flights. To help stranded passengers, Principato said most airports will keep one food vendor operating 24 hours a day, and will provide cots, blankets and pillows. To top of page

Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
50 years of the Ford Mustang Take a drive down memory lane with our favorite photos of the car through the years. More
Cool cars from the New York Auto Show These are some of the most interesting new models and concept vehicles from the Big Apple's car show. More
8 CEOs who took a pay cut in 2013 Median CEO pay inched up 9% in 2013 to $13.9 million. But not everyone got a bump last year. Here are eight CEOs who missed out. More


Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.