Change is in the airlines

Get ready for higher prices, fewer flights — and paying for a pillow

FILE/AP

This image of a nearly deserted baggage-claim area might be a little extreme, but with increased ticket costs, a reduction in the number of flights and extra charges for everything from a suitcase to a soda, there well could be fewer people in airport terminals in the coming months.

ATLANTA — The grip U.S. airlines have on travelers' wallets is about to get tighter as carriers go ahead with plans to trim their domestic schedules due to the high cost of fuel.

Executives acknowledge that fares will rise, discounts currently available will be scarce, and routes and frequencies of flights will be reduced as domestic capacity is cut through the end of the year.

The changes starting in September come on top of a litany of new charges — for luggage, drinks, pillows and other amenities — announced by some airlines earlier this year.

"Airline travel is airline travel; it's been bad for a long time," Chris Bardasian, an American Airlines frequent flyer, said recently at Dallas-Fort Worth International Airport. "I suspect prices will go up, fewer people will travel, and if you're willing to pay the price it will be fine."

There were sharp capacity cuts during previous weak economic periods in the early 1990s and between 2001 and 2003, but fares went down as discount carriers moved in and filled the void, offering more competition, analysts said.

Now, the high price of oil, airlines' limited ability to further cut certain costs and the fact that many of the discount carriers are facing the same difficulties as the big carriers make things different this time, analysts said.

"Despite this sluggish U.S. economy, the general demand picture is better than it was post-9/11," said Standard & Poor's analyst Philip Baggaley. "In addition, you have this consistent response across the board of airlines raising fares and adding fees."

On average, domestic fares between large metro cities are already up roughly 16 percent since Jan. 2, while fares between small cities are up roughly 37 percent year-to-date, according to Rick Seaney, head of airfare research site FareCompare.com.

The cheapest roundtrip ticket with a 10-day advance purchase, for example, on an American Airlines flight from Chicago to New York cost $258 on Aug. 26, excluding government and airport fees.

That was an 87 percent increase from the $138 it cost on Jan. 2 for a similar advance purchase, according to FareCompare.com.

The cheapest roundtrip ticket with a 21-day advance purchase on a United Airlines flight from Denver to Washington cost $382 on Aug. 26, excluding government and airport fees. That was a 37 percent increase from the $278 it cost on Jan. 2, Seaney said.

Recently announced airfare sales for travel during the traditionally slow fall season will be harder to come by as more capacity comes out of the system in the last four months of the year.

"If somebody sees a good fare, they should grab it," said Kevin Healy, senior vice president of marketing and planning for AirTran Airways.

Booking early for travel during peak times like the holiday season generally can get you a cheaper ticket than waiting until the last minute. But airlines usually do not offer fare sales for travel over the holidays.

American Airlines, United Airlines, Delta Air Lines, Northwest Airlines, Continental Airlines, US Airways, JetBlue Airways, AirTran and Alaska Airlines plan to cut domestic capacity during the third and fourth quarters by single- to double-digit margins.

JetBlue, for instance, in September will end service between several cities, including Boston to San Francisco and Washington to Las Vegas.

Southwest Airlines Co., which had resisted the kinds of capacity cuts being made by other carriers, will end service in November between Kansas City and Sacramento, Calif., and between Oakland, Calif., and Tucson, Ariz.

Some airlines, including JetBlue and Southwest, are adding or expanding service to states where other carriers are reducing service, like Florida. However, Southwest said recently that it will eliminate nearly 200 flights early next year as it struggles with high fuel costs and a weakening economy.

Fewer overall seats in the air mean planes that remain will be fuller, which gives airlines pricing power to raise fares.

"The reality is, the industry is going to have to cover its costs," American

Airlines CEO Gerard Arpey said.

Travelers are bracing for the impact of higher fares.

On a recent day at DFW Airport, passenger Vicki Schweiss said she might not be visiting her parents in Los Angeles quite so often this fall.

"If I can find a $200 ticket, I'll go," she said. "If there are fewer flights, that won't bother me, but if flights are really expensive, I just won't go or I'll go by myself instead of bringing my son and husband."

At Phoenix Sky Harbor International Airport, passenger Melinda Larson, a retired municipal worker, said she can afford the fare increases. What bugs her, though, are all the new fees.

"I'd just rather they incorporate that in the fare," Larson said of baggage fees some airlines are charging. "And then you're good to go."

Several airlines are now charging fees for a first checked bag. Some have imposed a fuel surcharge on frequent flier reward tickets. US Airways is even charging for soda.

Cuts in the number of flights in the U.S. also could mean that people who booked flights far in advance for travel after September might have to fly at a different time or, if a route has been eliminated by their carrier, they might have to find another airline to get them to their destination. But airlines don't expect that to be a big issue.

"A very, very small number of people would have purchased tickets for travel in September or thereafter before the flights were taken out of the fall schedule in May and June of this year," American spokesman Tim Wagner said.