By Dan Schlossberg
ConsumerAffairs.com
March 14, 2006
There's good news and bad news for airline passengers. According to the Federal Aviation Administration, fares will drop but delays will rise as the busy skies get even more congested.
Maybe so, but short term fares are headed straight up. Low-fare leader Southwest Airlines is leading a broad fare hike across the airline industry, raising fares by up to $10 for a one-way ticket as the company seeks to offset an expected $600 million jump in its jet fuel costs.
Most other major U.S. airlines have matched the move by Southwest. But a spokesman for JetBlue Airways said that carrier has not raised fares.
Southwest raised fares in January and late last week, it did it again. It boosted rates again over about two-thirds of its network, ranging from $2 on flights up to 400 miles to the $10 increase, to $309, for its most expensive walk-up fares -- the first time a Southwest fare has exceeded $299.
Complicating matters for those suffering through those delays is the cramped quarters on board, which the FAA suggests will get even worse.
The predictions came in Washington during the FAA's 31st annual industry forecast. And they matched similar projections from the Air Travelers Association, the Air Transport Association, and at least one airline president.
Airlines boarded 669 million people last year, up 6.6 per cent from the year before, but, if the FAA is right, will board more than a billion that's right, billion with a b by the year 2017.
Many of those passengers will be flying on smaller regional jets as airlines, reeling from huge hikes in the cost of fuel, seek to replace gas-guzzling larger jets.
Fuel prices are expected to rise another 15 per cent in 2006 before gradually declining over the next five years. But unrest in the volatile Middle East, source of much aviation fuel, could upset those estimates.
Not surprisingly, some lines are eliminating routes as a cost-saving measure a move the FAA predicts will cause a 0.2 per cent decline in the probable number of domestic passengers this year.
While 2006 is still projected as a difficult year for most carriers, a turnaround is possible by 2007. At least that's the opinion of Secretary of Transportation Norman Mineta, a speaker at the FAA conference.
"For the first time in several years," Mineta said, referring to 2001 terrorist attacks that sent the industry reeling, "we're no longer talking about recovery."
Airline CEOs might not agree: the International Air Transport Association projects a combined industry loss of $4 billion this year. FAA administrator Marion C. Blakey called the projection a momentary "bump in the road" and said there has been significant growth in the industry.
But Southwest Airlines chairman Herb Kelleher said the government's business forecast was "probably realistic."
