- The Washington Times - Sunday, March 26, 2006

Rising fares, pricey fillups take a toll

Spring is here. Want to hit the road?

It’s going to cost you. Gasoline prices have jumped by 15 cents a gallon over the past two weeks in many parts of the country.

Jetting out of town? Fares are rising. Low-cost airlines Southwest and JetBlue, among others, have announced ticket-price increases on several routes.

Going Greyhound? The big bus company has nudged some prices north.

The price of traveling is steadily rising. And the main culprit is oil.

“It’s all about the fuel,” said Marilee McInnis, a Southwest spokeswoman.

Crude-oil futures on the New York Mercantile Exchange ended last week at $64.26 a barrel, up 2.4 percent for the week. A barrel of oil costs about 10 percent more than it did a year ago, and triple what it cost in 2001. Every $1 increase in the price of a barrel of oil translates into a 2.5-cent increase per gallon of gas at the pump, according to AAA of Northern California.

U.S. pump prices have risen 15 cents over the past two weeks to an average $2.50 a gallon, Trilby Lundberg said yesterday, citing her biweekly survey of 7,000 filling stations nationwide.

Travelers, said AAA spokesman Sean Comey, are paying 30 cents more for a gallon of gas than they did at this time last year.

The higher costs come as the travel industry continues to rebound after it nearly ground to a halt following the September 11, 2001, terrorist attacks. With passenger traffic increasing, the airline industry was starting to show signs of life when the price of oil skyrocketed last year.

In 2000, the airlines recorded a $2.5 billion net profit. Between 2001 and 2004, the industry posted $32.3 billion in cumulative net losses, said John Heimlich, vice president and chief economist of the Air Transport Association in Washington.

Airfares have been creeping up the last few months, but prices are still at least 10 percent below year 2000 levels, he said. In 2001, from January to February, on average, customers paid $149.40 to fly 1,000 miles. In 2006, they paid $125.30.

“The industry is not yet profitable, and there is pressure to be profitable,” he said. “You can do that by increasing revenues or cutting costs. One is price, and the other is volume.”

Volume is up. The industry’s load factor — the percentage of seats filled with paying passengers — is up to about 80 percent.

“The economy is so strong, and the airplanes are full, so that gives the industry some leeway to raise prices,” said Mike Boyd, an airline analyst with the Boyd Group in Evergreen, Colo. He expects fares to rise another 4 percent or 5 percent this year, but not enough to scare consumers away.

“I wouldn’t look for travel to drop,” he said.

Still, Southwest Airlines said it estimates its fuel costs will jump $600 million this year after contracts that locked in prices expire. A few weeks ago, the Dallas airline raised prices $2 to $10 on certain flights, affecting about 7 percent of its passengers. Other airlines soon followed suit, but industry officials downplayed the moves.

“Before people panic, we’re talking about an increase of $10 to $15 a ticket,” said Allen Kay, a spokesman for the Travel Industry Association of America. “We’re not talking about an enormous increase.”

Mr. Kay said he expects higher prices in other segments of the travel industry as well.

Greyhound Lines raised some fares over the past few months in response to rising gas prices, said Anna Folmnsbee, a company spokeswoman.

“The amount varied, depending on trip length, origin and destination and a number of other factors,” she said. “Sometimes it’s as little as 50 cents.”

Despite rising costs, Mr. Kay doesn’t think Americans will curb their appetite for travel.

“They might not go as far, stay out as long or eat out as much, but they still want to go,”Mr. Kay said.

• Distributed by Scripps Howard

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