Airfare Up, Gas Prices Down

Airfare Hikes and Oil Prices

You probably noticed this yourself the last time you filled up your tank.

Gas prices have dropped by a nickel a gallon or so; the bad news is, prices at the pump are still close to $1 per gallon more than last summer.

Yes, the price of oil is still high, and since oil and airfare prices are joined at the hip, it explains why spring and summer flights have been so expensive during the current vacation travel period, certainly in comparison to the summer of 2010.

Good Morning America: Airfare Hikes

I spoke about this topic recently on ABC’s Good Morning America:

My key points:

  • Airfare is up: Tickets that cost $250 in January costs $320 now
  • Demand is up: Airlines charge more for tickets because people keep buying

So far, flyers have not yet reached their breaking point: when they decide to stay home rather than shell out for high priced airfare.

Airlines, Fuel Costs and Airfare Hikes

For airlines, the cost of fuel is now the number one operating expense, zooming from about 20% to about 40%, and it is the reason airlines keep cutting seat capacity. Look around: empty seats on flights these days are about as rare as free meals in coach. Besides cutting seats, airlines have been hiking prices.

Earlier this year, one airline or another attempted price hike after price hike, and seven of these were successful (meaning, the competition joined in and raised their fares, too). Here’s a quick comparison:

  • 2011: 12 attempted airfare hikes
  • 2010: 3 attempted airfare hikes
  • 2009: 4 attempted airfare hikes

How to Find Cheap Flights

It is not all bad news though. Airfare hike attempts have dwindled in recent months, and pricing has become very route-specific. Here are some tips for finding good deals and yes, winning the airfare game:

Sign up for FareCompare Real-Time Airfare Alerts: Let us know where you want to go and we let you know the instant prices change. Note: if you like the price you see in your alert, book immediately; the cheapest seats go quickly.

Check out the FareCompare Deals Blog: Every day, we show you new hand-picked airfare deals, directly from the airlines, with the latest price-drops.

As we like to say, FareCompare. And buy confident.

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Published: June 21, 2011