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Domestic airfares set record high in 2011

The average domestic airfare of $364 is up 8% from 2010. Adjusted for inflation, however, it's significantly below the 2000 peak.

May 01, 2012|By Hugo Martín, Los Angeles Times
  • Airline industry representatives say last year’s 28% jump in fuel costs made it necessary to raise airfares. Above, planes at Los Angeles International Airport.
Airline industry representatives say last year’s 28% jump in fuel… (Al Seib, Los Angeles Times )

Pushed by higher fuel costs, the nation's airlines increased domestic airfares to record levels in 2011, and ticket prices are going up again this year.

The average domestic airfare last year was $364, an 8.3% increase over the average of $336 in 2010, according to a report released Monday by the federal Bureau of Transportation Statistics. The previous record high was set in 2008, when the average domestic ticket price peaked at $346.

And airfares are expected to rise this year. The nation's largest airlines have approved three fare hikes since the beginning of the year, with each increase ranging from $4 to $20 per round-trip ticket. Industry experts predict airlines will press for even more hikes during the peak summer travel season.

"I can't remember paying this much," said George Hobica, founder of Airfarewatchdog, a travel website that tracks airfares. "I think we will see incremental increases until passengers scream 'No more!'"

Passenger advocates say travelers are already frustrated that they must pay higher fares in addition to fees to check bags and change reservations. They also cite charges for onboard food, cocktails and access to wireless Internet services. The nation's largest airlines collected an estimated $12.5 billion in such fees in 2011, according to a study by IdeaWorks, a Wisconsin consultant to airlines and other companies.

"If you are traveling with a family of four from New York to Disney World with bags, that is a pretty hefty price to pay," said Brandon Macsata, executive director for the Assn. for Airline Passenger Rights, a Washington advocacy group. "Passengers are definitely feeling it in their pocketbook and they are not real happy."

Airline industry representatives say the hikes are needed to cover a 28% jump in fuel costs in 2011. Airline officials also note that when adjusted for inflation in 1995 dollars, fares in 2011 averaged $247, down almost 18% from the inflation-adjusted high of $300 in 2000.

Industry representatives also say that because of higher fuel costs and other expenses, the nation's airlines reported a profit margin of only 0.3% last year.

"Even with the increases in revenues, we saw our costs grow the same, if not higher than, the increase in revenues in some cases," said Steve Lott, a spokesman for Airlines for America, the trade group for the nation's largest commercial airlines.

Industry analysts say the higher fares reflect a rebound in travel demand, particularly business travel, which dropped dramatically during the recession.

Despite the increasing demand, most of the nation's airlines have resisted adding significant numbers of seats or routes. That has led to higher ticket prices.

Also pushing fares up is a number of airline mergers over the last few years, which has reduced competition on several key routes.

"There are deals out there, but it might be for a seat on a red-eye flight," Hobica said. "If you want to save money you have to go when no one else wants to go."

Of top airports in the continental United States, the one in Cincinnati had the highest average domestic airfare last year: $502, according to the Bureau of Transportation Statistics. The one in Atlantic City, N.J., had the lowest average, the agency said: $189.

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