Fares and flights can't escape airline fuel woesby Martin Moylan, Minnesota Public Radio
Soaring fuel prices have virtually all U.S. airlines in a tailspin. Most carriers, including Northwest and Sun Country, plan to drop flights this fall. Meanwhile, they're trying to push up fares.
St. Paul, Minn. — Fewer flights. Higher fares. That's how airlines hope to get back in the black and offset a most painful runup in fuel prices.
The price of jet fuel has shot up about 270 percent since 2003. That's pretty much why U.S. airlines are on track to lose more than $10 billion this year.
Northwest CEO Doug Steenland told Congress last month travelers must pick up the tab for higher jet fuel prices, if airlines are to survive.
"We need to pass these prices through, and as they get passed through, the consumer is going to be travelling less," said Steenland. "Because as prices go up, demand will go down. And when demand comes down, we need to adjust the supply to reflect what that demand is to survive."
So far, Steenland says fares on some highly competitive routes haven't changed much at all. Fares on other routes are up 20-30 percent -- or more.
Many fares between the Twin Cites and Chicago have doubled or tripled, since the low-fare carrier AirTran Airways dropped service on the route earlier this year.
Overall, Steenland says fares need go up 20 percent to address current fuel prices.
But even as they lose mountains of cash on higher fuel costs, and cut the supply of flights, the airlines may not be able to shift much more cost to consumers.
Competition and the traveling public's limited tolerance for price hikes have greatly restrained fares. And that may not change very much for the balance of this year.
George Wozniak, who owns Hobbit Travel, thinks air travelers will be able to get where they want to go this fall. And given that fall is usually a slow time for air travel, Wozniak doesn't expect fares to go up much from where they are now.
"As far as getting from point A to point B, they're not going to have a problem," Wozniak said. "And I think you'll see pretty static pricing, even from a year ago."
Wozniak expects fares could rise somewhat to West Coast destinations served by Sun Country, though, because the low-fare airline plans to reduce its flights to a number of markets.
Sun Country is still figuring out how much and where it'll reduce flights. But spokeswoman Wendy Blackshaw says the Mendota Heights-based carrier won't eliminate any of its traditional destinations.
"We will still be going to the destinations that people have associated Sun Country with," Blackshaw said. "Especially for the leisure traveler, they really won't see any difference. Unless it's -- instead of three flights a day to Las Vegas, it might be two."
Eagan-based Northwest Airlines, which dominates the Twin Cities air travel market, has indicated it will cut domestic flying by 7 to 8 percent in the fourth quarter of this year. But it's signaled it will increase international flying by 2 to 3 percent.
Airlines have little low-fare competition on international routes. Therefore, they have more power to push through fare increases and fuel surcharges.
Northwest spokeswoman Tammy Lee says Twin Cities travelers will still be able to reach well over 100 destinations nonstop on Northwest or its regional carriers.
"Minneapolis-St. Paul travelers aren't going to see a dramatic change out of Northwest Airlines, because primarily we're trimming around the edges," Lee said. "We are paring frequencies, versus eliminating service, for the most part. So, they will still have plenty of choice, plenty of destinations."
So far, Northwest has announced only one unplanned service cut out of the Twin Cities for this fall.
Northwest Airlines will suspend flights between the Twin Cities and Paris, starting Oct. 1. The flights will resume in March. Northwest is temporarily dropping the route because of high fuel costs and falling passenger demand.
To be sure, fares and flight schedules aren't the only things travelers have to watch these days. They have to be increasingly aware of fees.
Airlines continue to tack on charges for everything from redeeming frequent flier awards to checking a second bag. Even a first bag, in some cases.
That trend is likely to accelerate as airlines try to somehow get enough money out of their customers to fly at a profit.
- All Things Considered, 07/01/2008, 5:50 p.m.