Rising gas prices causing airline fare hikes
For the sixth time since January 1, most airlines have increased their standard costs. This recent $10 boost in standard fares is especially significant because Southwest, usually a holdout, followed suit. The price boost is being blamed on the increasing expense of oil. Article source - Airline fare hikes blamed on rising fuel prices by MoneyBlogNewz.
Costs to fly boost
In accordance with airline industry states, the average price of an airline ticket has increased by $60 this year. A ticket that would have cost $200 on January 1, 2011, now costs $260. Not all airlines follow suit during price increases. This means that the costs will go back down. Unless all airlines raise the prices, generally it will go back down. Southwest Airlines did the latest $10 increase too though, even though normally it does not raise its prices.
Fuel costs for low-cost airlines
Southwest Airlines are one of several low-cost airline service providers in the United States. Unlike larger airlines, Southwest Airlines tries to stay away from adding fees like this. This is so consumers will not be upset and will continue flying with the company. JetBlue and AirTran are also low-cost companies that attempt to keep their costs low. The lower profit margins are not good all the time. There is more price volatility because of it. When a barrel of oil price raises $10; so will the cost of tickets. This is how the change typically works. The CEO of Southwest pointed out that Southwest will likely spend $1.3 billion on fuel in 2011, which is three times the total net income of Southwest in 2010.
Going everywhere expenses a lot
As airlines are raising their fares, travel in the U.S. in general is getting more expensive. Sometimes, an individual has to travel a long distance. There aren’t many choices for that individual though. Definitely airlines are always an option. The price of a long distant trip can be the same as getting a ticket when it comes to driving with the rising gasoline costs. Getting on a bus can cost quite a bit too. The increasing oil costs attribute to this. In some places, it is a choice to do rail travel. Nevertheless, a ticket that was $50 in 2008 is now going to cost about $150. There is more theory put into high-speed rails than other things.
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