U.S. airfares decline, or do they?

Fri Nov 8, 2013 7:04am EST

A traveller walks to his flight at Ronald Reagan National Airport as the sun rises in Washington, September 24, 2008. REUTERS/Jason Reed

A traveller walks to his flight at Ronald Reagan National Airport as the sun rises in Washington, September 24, 2008.

Credit: Reuters/Jason Reed

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(Reuters) - U.S. domestic airfares are falling, the U.S. Department of Transportation reported Thursday. But there's something missing in the data that could affect your holiday travel bill: fees.

In recent years airlines have stripped down their base fares in a process called "unbundling" - often not including even a single piece of luggage or a seat assignment in the price. And as most travelers know, they have added ways to charge people who want to bring along a suitcase, know where they're going to sit or change a scheduled flight.

"Fares are really just a starting point," says Christopher Elliott, a travel consumer advocate and author of the upcoming book "How to be the World's Smartest Traveler."

Frequent travelers can dodge many fees by achieving a high status with an airline's loyalty program or by using certain credit cards. Occasional travelers, however, will pay more in fees and are not likely to notice the lower prices the government is reporting, says Bob Mann, an airline industry analyst for R.W. Mann & Co.

These days, simply choosing a seat can run up your bill. "It's getting harder and harder to get good seats without paying extra," says Jeff Klee, chief executive officer of the travel booking site CheapAir.com.

That's especially true if you're traveling with family or have colleagues you want to sit beside. "Because so many airlines have started charging for a large percentage of the window or aisle seats," Klee says, "it is often impossible to get a row of seats together without paying a premium."

The Department of Transportation, which reported that airfares dropped by 3.6 percent for the year ending in June, also keeps track of a few major airline fees. Baggage fee revenue collected by the airlines declined by about 3 percent during the same period, to $1.67 billion, while revenue from reservation and change fees rose by about 10 percent, to $1.4 billion.

The average domestic fare, which includes both round-trip and one-way fares, was $378. That's down from an inflation-adjusted $392 for the same period in the previous year.

The city with the highest average fare in the nation: Huntsville, Alabama, at $547. The lowest was Atlantic City, New Jersey, at $159.

Atlantic City's only commercial carrier is discount airline Spirit Airlines, the trendsetter in add-on fees. Spirit reported a revenue increase of 33 percent in the last quarter to $456.6 million, of which $177.1 million came from fees.

Airline profits offer a better picture of whether travelers were paying more, Elliott says. On Thursday, Airlines for America, the industry association, reported that the 10 largest U.S. carriers had net earnings of $4.5 billion over the first nine months of 2013, an overall profit of 4 percent. That's up from $312 million, or 0.3 percent, in 2012.

The association also projected that 25 million passengers will fly during the 12-day period around Thanksgiving - about 1.5 percent more than during the same period in 2012.

For those who have yet to make reservations for flights around Christmas, all is not lost. "There are still flights to be had," Klee says.

You're likely to pay a premium during the holiday vacation period, however; flights then are one-third higher than they are at other times of the year, Klee says. And it will be costlier still for those heading to warmer locations such as Florida, Hawaii, Mexico or the Caribbean. His advice: Book now, as these fares will only continue to rise.

The more flexible you are on your travel days, the better chance you have to get a ticket at a lower price, Klee says, noting that the Sundays following Christmas and New Year's are two of the highest-demand, and thus priciest, travel days.

Elliott's advice: Try not to be sucked in by a low fare. Consider the fees you will have to pay before booking.

"Can you afford to not take luggage with you?" he says.

(Follow us @ReutersMoney or here Editing by Lauren Young and Douglas Royalty)

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Comments (1)
The airlines are REALLY stupid. How stupid do you ask? Consider this, they have a baggage fee of $35 let’s say. If that bag is too heavy (ie, just a few pounds over 50) then they want to charge $70 for that little bit of extra weight. However, if you go get another bag, and check that one, it costs just $35. So, the airline got less money, for the same weight, however that extra bag checked, just took up more room in the baggage compartment. Now, that really made absolutely NO sense, now did it??? Tons of examples like this one, people could write about forever.

Nov 12, 2013 11:31am EST  --  Report as abuse
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