Airlines raising costs in face of gas costs

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By Bradley I on Mon, 03-14-11, 04:48

For the sixth time since Jan. 1, most airlines have increased their standard prices. This particular boost in fares is unusual because Southwest was integrated. Southwest is typically the holdout on these fare increases. The increasing cost of oil is being blamed for this boost. The price is increasing even further because not all airlines hedged their bets on oil costs. Source of article - Airline fare hikes blamed on rising fuel prices by MoneyBlogNewz.

Flying costs are only going up

Airline industry states showed a rise in airfare tickets on average this year. There was a $60 boost on average. Instead of paying $200 for a ticket at the beginning of the year, you'll pay $260. This is the average increase. Not all of the airlines did this price adjustment though. The rise wasn’t something they needed to do. Unless all airlines raise costs, the increases usually go back down. Even though normally Southwest Airlines doesn’t raise its costs, it did this time. The most recent $10 increase occurred at Southwest too.

Economy airlines and gas

In the U.S., there are many low-cost airline companies including Southwest Airlines. So that the business can keep customers happy, Southwest Airlines generally doesn’t raise its fees like the large airlines will. Other economy service providers will keep prices low too. This consists of JetBlue and AirTran. There is more volatility with these lower profit margins though. Typically airlines will raise ticket costs about as much as a barrel of oil price goes up. Three times the income Southwest made in 2010 could be spent in 2011 with about $1.3 billion on fuel, which the Southwest CEO explained.

Price of travel only going up

As airlines are raising their fares, travel in the United States in general is getting more expensive. When individuals have long distances to travel, they're left with relatively few options. Clearly airlines are always an option. The cost of a long distant trip might be the same as getting a ticket when it comes to driving with the increasing gasoline costs. The increasing oil prices are leaving even bus trips more expensive. Rail travel is still a viable option in some areas of the country, however a train ticket that was $50 in 2008 is now $150, and service within much of the West is spotty. High-speed rails are still more theory than practice.

Information from

WSBTV

wsbtv.com/news/27110644/detail.html

USA Today

travel.usatoday.com/flights/post/2011/03/another-day-another-fare-hike/146578/1

News OK

newsok.com/fuel-costs-force-southwest-to-add-10-to-ticket-cost/article/3546778

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