Airline ticket prices have increased and will go up even more this summer making it harder to find cheap travel options, particularly cheap airplane tickets and cheap vacation packages. Airlines claim that soaring fuel prices are likely to cost them billions more than last year.
Historically, ticket prices increase as the summer travel season approaches. Experts expect prices to gradually rise and then jump up more significantly in April and May as people start buying tickets for travel over the summer.
Average ticket prices have increased 9 percent between January 2011 and January 2012. Fuel appears to be the driving force behind these higher prices. The spot price of jet fuel rose 18 percent over the same period. Airlines consume 40 million gallons per day, making fuel their largest expense.
Airlines have limited options when it comes to dealing with higher fuel prices. Some have gotten into the risky practice of hedging against future anticipated price increases which is similar to buying insurance. However, the future price of oil is far from predictable. Airlines have also been adding more efficient planes, though it takes many years to replace an entire fleet.
Airlines responses to increasing fuel prices will include raising ticket prices, running fewer sales, and reducing flights on select routes. As fuel costs rise, additional routes become unprofitable and are subject to being cancelled. One example is Delta Airlines which will stop flying between Miami and London in April. Although the airline cited inconsistent demand as one of the reasons for this action, rising fuel prices was the biggest culprit.
AirTran Airways will stop flying to several cities later this year because it has identified markets that cannot be profitable at current fuel prices.
Airlines are quick to point out that over the long run ticket prices have increased at a much smaller rate than for other consumer goods and services.
Travelers best defense against rising airfares is to go to one of the major travel Internet companies, such as Cheapfares, Expedia, or Orbitz, to be able to quickly and efficiently compare the cheapest prices available.