News & Observer | newsobserver.com | Fewer fliers packed tighter

Published: May 14, 2008 12:30 AM
Modified: May 14, 2008 02:44 AM

Fewer fliers packed tighter

Airlines try to offset higher fuel costs

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WASHINGTON - Fewer Americans are expected to fly this summer, but don't expect more empty seats as carriers park planes to help offset surging fuel costs.

The trade group for the nation's largest airlines on Tuesday forecast 211.5 million passengers will travel on domestic carriers between June 1 and Aug. 31. That would be a 1.3 percent drop from last summer.

Airlines are reducing their carrying capacity amid slower economic growth and rising jet fuel prices, the Air Transport Association said.

But planes will be nearly 85 percent full and delays emanating from New York-area airports will remain a problem, ATA President and chief executive James May said. Late flights cost carriers $10 billion annually, a drag on profits that has them "doing all they can to avoid lengthy delays," May said.

"It's in our best interest to minimize those delays to the fullest extent possible," May said. "They cost us in terms of customer loyalty ... [and] real dollars."

Some large carriers last week again raised ticket prices to offset surging fuel costs. Raising fares and charging for extra bags and other amenities have been the preferred coping mechanisms for airlines paying about 82 percent more for jet fuel than they did a year ago.

Still, May said further fare hikes this summer are "inevitable."

Rick Seaney, chief executive of airfare research site FareCompare.com, does not share the view of analysts who say we've hit the "tipping point" on fare hikes -- 11 of 15 attempts have been successful this year. But the trade group's summer forecast and an unusual move by Delta Air Lines in recent days suggest an end to the increases may not just be wishful thinking.

Delta last week raised fares by $20 round trip as a fuel surcharge, and its five largest competitors quickly followed suit. But on Sunday, the carrier rolled back almost half of the increases, largely on flights that service cities where competition is fierce with low-cost carriers Southwest Airlines and AirTran Airways.

"It's the first time I've seen Delta be sensitive about overlap markets," Seaney said, adding that he'll be convinced a hike hiatus is coming when demand for business travel slumps.

The last summer that domestic airlines carried fewer passengers was 2006, which was down 1 percent from the prior year, according to the federal Bureau of Transportation Statistics. Domestic airlines carried about 213.8 million passengers last summer, a record number for that period.

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