Jet Fuel Is Down, But Not Enough For A Thanksgiving Fare War
Airlines are paying less for jet fuel these days. But don't expect that price drop to translate into Thanksgiving travel bargains for you.
Rather than cut fares, airlines are turning fuel savings into cash for acquiring aircraft, upgrading software, rewarding workers and attracting long-term investors, according to John Heimlich, chief economist for , A4A, a trade group.
The major carriers that filed for bankruptcy during the Great Recession have learned to be more "fiscally responsible," Heimlich told reporters Thursday. After years of fighting with creditors, "they are paying their bills," he said.
In the long run, "enhanced creditworthiness" will create a more stable industry that can better serve travelers, Heimlich said.
But for now, those bill-paying efforts are sending air fares higher, with carriers pushing them up five times this year, according to Farecompare.com.
While A4A notes that fares are lower than in 2000 after adjusting for inflation, consumers might point out that today's higher fees and taxes have driven up total travel costs. In addition, in many markets, fliers have fewer choices following a merger wave that combined American Airlines with US Airways; United with Continental; Delta with Northwest; and Southwest with AirTran.
Heimlich points out that the consolidated industry needs additional revenue to keep pace with higher operating costs for aircraft loan payments, rents, landing fees, new software and skilled labor.
In fact, the industry's capital expenditures for the first nine months of this year amounted to more than $1 billion per month — the highest rate of reinvestment in 13 years, he said. Customers are benefiting from those investments by getting more Wi-Fi options, updated gate areas, new aircraft and better kiosks.
These upgrades may attract more travelers in the future, but for now, domestic air traffic growth has been restrained, still running below pre-recession levels.
Heimlich predicts that this year's improving economy will help nudge up air travel to 24.6 million passengers over the Thanksgiving travel period, an increase of 1.5 percent from last year. But that number is still about 6 percent lower than the Thanksgiving period before the recession hit, he said.
He says this year, Sunday, Nov. 30, will be the busiest air travel day of this year, followed by Wednesday, Nov. 26.
George Hobica, founder of Airfarewatchdog.com, says bargain hunters have better luck finding cheap flights when they are willing to accept "middle seats next to the lavatory, red-eye flights, or 5 a.m. departures."
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