Paying more to fly
If you think it costs too much to fly now, you’re not going to like what airlines have in store for the summer. Experts expect the airlines to raise fares to keep pace with rising fuel prices. According to a report by CNNMoney.com, domestic fares increased 6 percent in January and February. But the price of fuel jumped 55 percent over the same period. “If fares were keeping pace with fuel, then airlines wouldn’t be going out of business,” John Heimlich, chief economist for the Air Transport Association, an industry trade group, is quoted in the report. He said that 34% of a ticket’s price goes towards covering the fuel cost, compared to 15% in 2000. The higher prices may not last long, as consumers are unlikely to support them, analysts say. Other measures, such as reducing capacity, are more likely to help airlines cut costs. “We’re in a consumer-led recession,” said Heimlich. “That’s the most difficult time to raise fares.”
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