Airfares aren't taking off everywhere

[September 29, 2008]  MINNEAPOLIS (AP) -- Airfares are up, right? The short answer is yes -- 22 fare increases this year. But fares in some cities are flat or even down, as fierce competition keeps airlines from charging as much as they would like.

Business fares in early September were down 5 percent in Phoenix and 4 percent in New York compared to the same week last year, according to research by Bob Harrell of Harrell Associates, who tracks airfares. In many other cities ticket prices were up only marginally -- 1 percent in Orlando, 3 percent in Atlanta, 4 percent in Denver and Las Vegas.

The good news in those cities doesn't change the bad news for everyone else: Overall, fares are up -- 11 percent for leisure travel, 6 percent for business fares, according to Harrell. Many individual cities are worse. He found year-over-year increases of 26 percent in Philadelphia, 17 percent in Minneapolis, 15 percent in Newark, N.J., 12 percent in Dallas.

Yet fares in Denver are up only 4 percent over the past year. The reason? Southwest Airlines has been adding flights as United Airlines and Frontier Airlines pull back. By Nov. 2 Southwest plans to have 115 daily flights out of Denver, a nine-fold increase from mid-2007.

Expedia's Travel Trendwatch newsletter says low-fare competition has caused fall fares to decline 32 percent between Denver and San Francisco, and 30 percent from Denver to San Diego. It also noted declines from Indianapolis to Las Vegas.

"In the markets where there's less supply, the airlines will definitely try to raise prices, and the customers in those markets will face higher prices," said Greg Schulze, Expedia's vice president of air accounts.

Overseas routes are another area where pricing pressure is working against higher fares. Schulze said that with fewer airline seats flying in the U.S., the number to Europe has actually increased. "They're going to have some seats to fill," he said.

Aaron Thomas, 25, has noticed that the competition seems to be keeping Denver fares in check compared with other cities.

"It hasn't been nearly as bad. I just moved from California, and the price from there has definitely skyrocketed," Thomas said, 25, said after arriving at the Minneapolis airport on a flight from Denver.

His girlfriend, Melissa Walter, a 25-year-old certified public accountant, said she flies from Denver frequently, and had just booked a flight from Denver to Chicago for $280," which is pretty amazing."

Farecast, a travel search site owned by Microsoft, shows that airfares in San Antonio dropped 12 percent this summer from the summer of 2007. Thank AirTran, which entered that market this year. In Austin fares are up 5 percent, but they dropped to Dallas, Los Angeles, Philadelphia, and Phoenix, according to Farecast. JetBlue has expanded in those markets.

Fares are staying lowest in cities with the most discount competition, said Mike Fridgen, Director of Product Management for Farecast. He says that if you don't live in a market with competition from a discount carrier, you're probably seeing fares rise.

And Farecast says fares for Thanksgiving travel are up 35 percent from last year, while Christmas and New Year's fares are 31 percent higher.

The overall increases are "as dramatic as I've seen it in all the years that we've been tracking it," especially leisure fares, Harrell said. Usually leisure fares could be expected to drop in the fall, but airlines "believe that they can keep these fares at summertime peak levels," he said.

The across-the-board increases were concentrated in the first half of this year. Of 22 fare increases attempted by airlines, the last successful one (meaning other carriers matched it) was July 2, according to fare-tracking Web site FareCompare.com.

For business travelers outside of those fortunate cities where fares aren't rising, some of the old tricks for getting cheaper fares become even more important. Advisers at business travel agency Carlson Wagonlit Travel are telling fliers to be more creative about using alternate airports, said Dale Eastlund, a senior director of corporate travel at CWT's Solutions Group.

He said fares from Minneapolis to Newark used to run in the $300 to $400 range. Now it is more like $1,600 -- but flights to nearby John F. Kennedy International Airport are still around $300.

"There are alternatives," he said. "It's a matter of educating travelers what those alternatives are to save money."

Sherry Kragler, an associate professor of education at the University of South Florida who had just flown from Orlando, Fla., to Minneapolis, said she flies several times a year and fares have stayed nearly flat.

Fees like the $15 she paid to check her bag add up, but it's still "nothing too exorbitant, to where I'd cancel a trip," she said.

[Associated Press; By JOSHUA FREED]

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