Rise in Ticket Prices Expected as Airlines Report Profits

What’s good for the airlines is not necessarily good for passengers. As airfare analyst Rick Seaney puts it, “With most of the airlines now reporting profits, I expect the price of tickets will go up.” He hastens to add that cheap tickets will not disappear but may be a little harder to find.

Uh-oh: Southwest Adds New Fee

Airfare Prices May Rise 5% to 7%

Seaney tells FareCompare, “I would not be surprised to see a 5% to 7% increase in domestic airfare this year.” He added that last year prices increased by about 5% overall compared to 2011, and so far this year  airlines have launched two airfare hike attempts, though both ended in failure. Watch for more hike attempts, said Seaney, perhaps as often as every two to three weeks.

Rising Demand Spurs Rising Profits

One of the reasons airlines are emboldened to raise ticket prices is rising passenger demand for travel which Seaney characterizes as morphing from “tepid” to “good.” Then there’s the fact that airlines are healthy.

Airline Snapshot: Best and Worst

US Airways reported a record profit of $537 million for all of 2012. Southwest profits fell 49% in the fourth quarter of 2012 but the airline did make a profit ($78 million) and sees strengthening passenger demand in 2013. Delta’s fourth quarter profits were hit hard by Superstorm Sandy to the tune of $100 million, but it too made money, a reported $7 million.

In fact, reports say all the airlines will show a profit with the exception of soon-to-be-emerging-from-bankruptcy American but even that airline did not do as badly as projected.

Cheap Flights – Harder to Find but Still Available

As analyst Seaney notes, everything can change depending on the landscape of the economy – and the price of oil – but for now, expect ticket prices to creep up. That doesn’t mean cheap flights will disappear, only that consumers may have to search for them more diligently. Knowing the cheapest days to shop and the cheapest days to fly will help, he adds, but the biggest assist will come from comparing prices. Going to a single airline site just doesn’t cut it anymore, says Seaney who frequently poses the question, “Why pay a penny more than you have to?”


Published: January 24, 2013