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More Airline Fees in 2011? My Predictions

January 20, 2011 | Posted in: Airfare News | 0 comments

Prediction – Fees will Rise

Airline fees that were once unthinkable may become the norm; blame it on the rising price of oil. Plus, watch for price hikes in existing fees, too.

I’ve been studying the matter, and the following are what I consider to be the six likeliest new or changed fees in the coming year. Get on Facebook and tell me if you agree or disagree – or have your own ideas for new fees we’ll see.

Bonus: At the end, I’ll tell you which fees we probably won’t see in 2011.

Top 6 Likely New Airline Fee Changes in 2011

These are real possibilities in the coming year:

  1. No More Free Rides for Infants: Currently, babies under the age of two fly free if they sit on an adult’s lap on flights within the U.S. Don’t be surprised if airlines start charging half-priced fares for  these lap children.
  2. No More Free Meals in Coach on Transoceanic Flights: United Airlines tried this without success in the last 18 months but if the price of oil keeps rising, look for others to try this – and make it stick.
  3. Charging for Overweight Carryon Bags: Hawaiian Airlines already charges an overweight fee for carryons weighing more than 25 pounds; look for others to try this, too. Airlines may find policing this a pain, but presumably a new revenue stream will make it easier to bear. See our Domestic Baggage Fee Chart for more.
  4. Charging for Soft Drinks and Water on Domestic flights: US Airways gave this a whirl a couple of years ago but within a few months, dropped the unpopular policy. However, I think it’s likely this is an idea whose time has come – again.
  5. Award Redemption Fees: Paying a fee to redeem your free ticket has already happened; Northwest (now part of Delta) tried it during the last fuel crisis; again, check today’s oil prices – this could happen.
  6. Bundled Fees: This is something we’ll supposedly like: pre-packaged or bundled fees for a discounted price. Another form we might see this in is using branded credit cards to save more on fee bundles.

Airline Fees You Probably Won’t See in 2011

No, I don’t think we’ll see fees for oxygen masks or lavatories or similar, nor these:

  • TV Turn-off Fee: So those annoying programs quit interrupting your catnaps
  • The Apple Fee: For those who want to watch videos on a seatmate’s iPad
  • Record-the-Delay Fee: For using a smartphone video camera to document a 3 hour tarmac delay
  • Reclining Fee: For using your seat as it was intended
  • Online Reservation Fee: To make reservations on an airline website (Spirit excepted)
  • Carryon Bag Fees: Yes, Spirit does it attracted such scorn from the public that I don’t expect other airlines will try it. Yet.

Back to Back Domestic Airfare Hikes

January 17, 2011 | Posted in: Airfare News,Airline News | 0 comments

Back to back airfare hikes

UPDATE #2 (1-18-11 2:25pm CST): At lunch time today Southwest jumped in matching the cheaper of the two initiated hikes (see initial rundown below) across the bulk of their route system.

The Southwest matching was was about 75% of the level of the hike in the first week of the year underscoring that competitive pressure still prevents complete system wide increase attempts.

Additionally Alaska Airlines also matched along with US Airways adding more matching routes – virtually assuring the success of this hike making it the 4th in a little over a month.

Because this hike was initiated by two airlines simultaneously with different amounts, airlines have matched portions of both hikes in order to maintain a competitive equilibrium.

I don’t recall seeing Southwest, even in the height of runaway oil prices in 2008 match or initiate domestic airfare hikes in two successive weeks — or for that matter successive months.

UPDATE #1 (1-17-11 10:42pm CST): 

Continental and US Airways matched the United Airlines version of the hike ($4 to $10 roundtrip), while American matched both United and Delta ($10 to $20 roundtrip).  Southwest matched Delta in a relatively small number of markets.

Tonight’s domestic airfare feed is not all bad news for price conscious consumers as Frontier launched a big sale along with typical Monday evening sale activity from Southwest – it isn’t unusual to see sales with limited number of seats amidst domestic airfare increases.

EARLIER: At 1pm EST today the FareCompare proprietary airfare processing system detected significant domestic airfare hike activity simultaneously from both Delta and United Airlines on over 40,000 city pairs representing the bulk of their respective route systems.

Delta raised domestic ticket prices by up to $20 roundtrip ($10 each-way) and United by up to $10 roundtrip ($5 each-way).

The Delta hike is laddered – based on distance with $5 hikes each-way for trips less than 1,500 miles and $10 for longer trips.

The United hike is also mileage based into 3 groupings: $2 each-way for trips less than 500 miles, $3 each-way between 500 – 1,500 miles and $5 each-way for trips more than 1,500 miles.

Usually one airline leads out on a domestic hike with others deciding to match in the following 36 hours; in this case either United or Delta will have to modify their hike to bring them in line with one another ($10 or $20 roundtrip) as airlines still live by the recessionary competitive rule of never being $1 more or less than their competiton.

The next domestic airfare distribution is at 8pm EST and we are likely to see significant matching activity by legacy airlines; oddly, Continental did not file a hike along with its newly merged partner at 1pm.

While we have seen this pace of weekly domestic hike activity in 2007 and 2008, we have never seen Southwest match legacy-initiated hikes in back-to-back weeks.

OPEC revised its 2011 demand forecast earlier today which, along with the economy, has airline management’s full attention.

This domestic airfare hike attempt represents the 2nd in 2011 and the 4th since mid December of last year.

We will continue to update as significant events occur.

American’s Dispute with Orbitz, Expedia: “Like an NFL Lockout”

January 10, 2011 | Posted in: Airfare News,Airline News | 0 comments

American dispute orbitz expedia

As I see it, the online travel agencies’ decision to pull the carrier’s fares from their sites is more like an NFL lockout than a negotiating ploy.

And that’s what I said on a conference call Friday morning (1-7-11) with analysts from the St. Louis-based financial services firm Stifel Nicolaus, describing the dispute between American Airlines and Orbitz and Expedia (lately joined by global airfare distributor Sabre).

I also said this is one of the craziest situations I’ve ever seen. In fact, if you had told me even just a month ago that we’d ever see Orbitz and Expedia arm-in-arm, I would have laughed out loud. But, that’s what’s happened. Let me dig a little deeper into this story.        

At the heart of the dispute, I think, are two things: money and control.

American Airlines presumably thinks it’s paying too much in fees to these giants of the online travel agency industry (OTAs) for displaying the carrier’s fares, and American would like consumers to go to the AA website; this would allow the airline to avoid the fees it pays to OTAs, plus it would allow American to invite consumers to sample a broader range of its fee-based services such as early boarding and front-of-the-cabin seating which would help the airline generate more revenue.

However, for an aggregator like Expedia, for example, displaying the full panoply of fee options by all airlines and comparing them would be a nightmare.

Meanwhile, there are two points I’d like to make right now, just so there is no confusion – especially for all you airfare shoppers out there:

  1. FareCompare has American Airlines prices. FareCompare.com will continue to provide shopper with prices for American Airlines and other carriers, even though two of our fine partners, Orbitz and Expedia do not (at the moment, anyway).
  2. FareCompare takes no sides in this dispute. Actually, we do take one side: we are always on the side of the consumer. Helping people make the best airfare shopping decision possible is what FareCompare is all about.

So what does this all mean for airfare shoppers?

To some extent, this dispute means it will be harder for passengers to comparison shop. Anytime shoppers lose an outlet (or two or three) they have fewer ways to directly compare airfare prices, so, they lose out. Worst case scenario would be a return to the bad old days (remember phoning one airline after another, in an attempt to find the best price to your destination?); and who knows, perhaps this will mean a shift in the balance of power for the next decade.

However, I suspect this will all shake out by the third quarter of this year. We shall see.

In the meantime, will American tickets purchased on Orbitz or Expedia be honored? Absolutely. However, changes to tickets purchased on Orbitz must be made through AA reservations, while changes to tickets made on Expedia must be handled thru Expedia customer support.

3rd Domestic Airfare Hike in the Past Month

January 9, 2011 | Posted in: Airfare News,Airline News | 0 comments

american hikes airfare while other airlines add peak travel day surcharges

UPDATE: This evening (1-9-11), Delta Air Lines joined in matching the airfare hike.

The third domestic airfare hike in the past month and the first of 2011 has been initiated by U.S. airlines. Domestic airfares have been increased between $4 and $10 roundtrip ($2 and $5 one-way) based on flight distance.

Here’s how it all came down: the FareCompare proprietary airfare tracking software detected a relatively minor amount of airfare hike activity in northern and midwestern cities this past week which normally wouldn’t have been a significant event – until late Friday evening, when Southwest Airlines (which rarely initiates an airfare hike) jumped in across most of their routes.

By late Saturday, almost all U.S. airlines except Delta matched the increase, including American, United/Continental, US Airways and Frontier (and we expect Delta to match late Sunday).

We haven’t seen this pace of domestic airfare hikes since 2007. That’s when fuel prices began to jump dramatically in last quarter and airlines began to institute fuel surcharges; domestic fuel surcharges were removed in November of 2008 as oil prices began to dip from a peak that summer.

These recent hikes effect the typically slower travel period of January and February as most airline tickets are sold within 30 days of departure.

While fuel prices have been hovering near recent highs, it appears these are hikes are more likely related to continued domestic capacity discipline along with strengthening demand.

In case you were wondering, there is no reason to believe these recent 2010/2011 airfare hikes are in any way related to the new ticket distribution issues between online travel agencies, GDS and legacy carriers during the same time period.

We have also seen over the past few months a renewal of domestic peak travel surcharges between $10 and $30 roundtrip for 2011 travel. In the past few years, peak travel surcharges have been a popular way for domestic airlines to raise ticket prices on selective high volume time periods around holidays and summer travel in 2009.

We will update this information as necessary.

Dallas CEO Magazine – Rick Seaney and the Origins of FareCompare

January 6, 2011 | Posted in: Airfare News | 0 comments

Rick Seaney and the origins of FareCompare.com

If you’re not in Texas, you might be unfamiliar with D CEO Magazine (heck, you might not be familiar with it if you are in Texas), but you’ll find a story inside the current January/February issue feature yours truly – and that picture at left is from the article.

I mention it because it provides a quick glimpse into the origins of FareCompare, which Graeme Wallace and I founded back in 2006, after we did some work for Hotels.com.

Here’s a couple of paragraphs from D CEO Magazine, for you online airfare history buffs out there (and I’m one of them):

“Rick Seaney knows first-hand the technological hurdles that have been overcome to make online travel possible. In 2002, XXI Technologies, a company led by Seaney, a former oil and gas technologist, and his business partner, Graeme Wallace, was hired by Dallas-based Hotels.com to figure out how to quickly calculate flight fare information for online visitors.”

“The challenge was that each day there were 160 million new airline prices to sort through. That’s right: 16 plus seven zeros. It took 14 months, but Seaney and Wallace were able to find a solution.”

The full article has all kinds of interesting insights into the future of the online travel industry – and as always, I’d love to hear your thoughts on this on Facebook

TV News: Rick Seaney on Finding Spring Break Deals and American Airlines Dispute

January 6, 2011 | Posted in: Airfare News,Airline News,Multimedia,Travel Tips | 0 comments

Rick Seaney on American Airlines Dispute Spring Break Deals

I appeared on the WFAA program Good Morning Texas today, part of a regular segment called “Rick’s Seaney’s Travel Advice” and as usual I had a lot to say and plenty of tips to dispense.

Take a look at the travel advice video for yourself; I start off by talking about the American Airlines dispute with Orbitz and Expedia, and wind up with some advice for anyone interested in Spring Break travel.

And please see my three important tips for purchasing Spring Break airfare, just below the video. As always, I want you to get the best deals – and if you have any other tips – share them on Facebook.

Spring Break Travel Tips

  1. Start shopping now, by looking at ticket prices on FareCompare
  2. Consider possible destinations and sign up for airfare alerts now
  3. Buy your tickets no later than mid-February

American Launches Airfare Hike as United and Continental Introduce New Peak Travel Day Surcharges

December 28, 2010 | Posted in: Airfare News | 0 comments

american hikes airfare while other airlines add peak travel day surcharges

UPDATE 3. – 12-29-10: As of this morning (Dec. 29), the $20 roundtrip airfare hike initiated by American Airlines on Monday has now been matched by United, Continental, Delta, US Airways and Alaska Airlines. Carriers that have so far NOT joined in the airfare hike include AirTran, Frontier, JetBlue and Southwest.

UPDATE 2. – 12-28-10: This afternoon (Dec. 28), US Airways also matched the American-initated airfare hike of Dec. 27.

UPDATE 1. - 12-28-10: This morning (Dec. 28), both United Airlines and Continental Airlines matched Monday’s $20 roundtrip airfare hike initiated by American Airlines. We’ll continue to monitor the 1pm and 8pm feeds to see if US Airways matches. Southwest meanwhile, appears to be sitting this hike out – at least for now.

EARLIER: In the midst of one of the worst travel disruptions of the year that saw thousands of passengers stranded at airports along the Eastern seaboard due to blizzard conditions, airfare prices are on the rise.

New Surcharges: On Monday morning (Dec. 27), both United and Continental added a new $10 one-way “peak travel day” airline surcharge to the majority of their domestic routes ($20 roundtrip). These surcharges have been added to all future travel dates, and are incorporated into the price of the ticket.

Airfare Hike: At midday on Monday (Dec. 27), American Airlines initiated a $20 roundtrip airfare hike for the bulk of its domestic route system; this hike was soon matched by Delta Air Lines. This the second airfare hike launched by American this month.

It’s worth noting that these increases come on a day in which oil prices soared to a 26-month high, which impacts the airlines’ jet fuel costs.

Watch this space; we’ll update as warranted.

Rare Domestic Airfare Hike for 2010 – $10 Price Increase

December 15, 2010 | Posted in: Airfare News | 0 comments

airfare hike update legacy airlines match united hike

Two days ago (Dec. 13), American Airlines initiated a domestic airfare hike of $5 one-way for flights over 500 miles ($10 roundtrip) and a $3 one-way hike for shorter flights ($6 roundtrip); these hikes were added to the bulk of the carrier’s route system.

By the next day, both legacy network airlines and the low cost carriers matched the hike including Alaska, Delta, Frontier, Southwest, United, US Airways and Virgin America – virtually guaranteeing this to be one of the few successful hike attempts of the year.

Domestic airlines have struggled to raise base airfare prices this year, but numerous tries have crumbled due to lack of unanimous participation; and, regardless of the gradually improving economy, airlines continue to live by their recessionary domestic pricing motto of not being a dollar more or less than the competition.

This doesn’t mean that consumers haven’t been paying more for tickets this year.

Domestic airlines have resorted a handful of strategies to lift ticket prices this past year by specifically targeting high demand periods with peak travel surcharges of up to $30 one-way, and by selling fewer discounted seats (yielding up especially this summer) while keeping their planes completely full (maintaining capacity discipline).  These techniques, combined with the continued prominence of airline fees, have been the fuel for recent financial successes.

With oil prices hovering near 2010 highs of $90/barrel and recent positive statements from airline executives regarding winter demand, my prediction is that we will likely see more domestic hike attempts as we head into 2011.

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