There isn't much you can do about airfare prices
Face it: Searching for reasonable airfares is depressing these days. In fact, any time I see "airfare" in headline (like early this week), I suspect there is an industry-wide airfare hike in progress, and I shake my head before I read on. What's the back story about these increases? Why do they happen, and why are some successful and some not? Is there anything the average traveler can do about?
The price: The final price you pay for a seat on airplane is made up of several components. You have a modicum of control over components like add-on fees for talking to an agent, checking a bag, using a pillow or blanket, having a snack or sitting in an aisle seat - or even sitting next to your family, in some cases. You can travel light, fly hungry, let your 3-year-old sit next to strangers - you decide.
Other components are fixed, like government taxes, surcharges and fees. There are actually more of those than I have time or space to talk about. But trust me, you can't say to the airline, "Oh, I think I won't pay that surcharge or tax this time."
Lastly, there is the base fare, or more accurately, base fares, depending upon whether you want the cheapest non-refundable fare on up to the most flexible first-class fare. The base fares are where the rate increases get applied. Increases are usually expressed in flat amounts, say $5-$10 round trip on domestic fares. Generally, fare increases get added across all classes.
The why: Airlines impose rate increases to make more money. (Duh!) Not surprisingly, increases can happen just after end of a quarter, when airline revenue is posted. Airlines are carefully controlling inventory (only so many flights and seats). With supply limited, the only way they can push the bottom line up is to increase fares and fees, and it is happening more and more.
Revenue from add-on fees has increased tenfold over the past four years: $2.45 billion in 2007 to $22.6 billion in 2011. Last year alone there were almost two dozen attempts to raise base fares - but the increases were only successful about half of the time.
Why? A fare increase is often started by a "legacy carrier," one of the few big guys still flying since the 1978 deregulation - think United, American, Delta, USAirways. They post a fare increase and watch carefully to see if their competition will match the increase. Sometimes they fall like dominoes (including the so called low-cost airlines like Southwest) - usually when the airlines all notice that people are still buying seats, even at the higher price. That's a successful rate increase. A failure is when people stop buying tickets, other airlines don't follow and the initiating airline has to roll back to the original price.
The remedy: Sorry Charlie! As an individual, there is little you can do to avoid or impact rate hikes. But you can follow the industry and get useful tips online. My favorite for this kind of info is farecompare.com. Founder Rick Seaney gives sound practical advice - advice that I've incorporated into my own travel search methodologies, like booking mid-week (when people don't like to start or end a vacation), knowing fare histories before booking and signing up for "specials" emails on airline websites. I love farecompare.com's travel alert feature that monitors pricing on my favorite routes. It also dishes useful news, like the upcoming key dates Aug. 20-21, when airfares should drop 10-20 percent as the "big guys" drop the peak travel surcharges they imposed for the summer. I can't wait to log on!
(Chase Binder lives in Bow. Read her blog at travelswithchase.blogspot.com.)