Fuel costs may not send airfares sky-high, but watch bag fees

CHICAGO –– Despite unusually high jet fuel prices, travelers shouldn’t necessarily expect sky-high airfares during the Thanksgiving and Christmas travel seasons. But watch out for those fees.

A record 30.6 million passengers are expected to fly on U.S. airlines during the 12-day Thanksgiving travel season, an industry trade group said Wednesday. Those who haven’t flown since the summer vacation season might run into higher bag fees –– JetBlue Airways, United Airlines, American Airlines and Delta Air Lines raised them.

Though jet fuel prices have declined in recent weeks, U.S. airlines were paying about 30 percent more for each gallon of fuel in the first nine months of this year, from the comparable period last year, according to the U.S. Department of Transportation. The extra costs wiped out increases in passenger-related revenue in the first nine months of the year, according to John Heimlich, vice president and chief economist at industry group Airlines for America.

The average domestic airfare was about 4.5 percent lower in the second quarter of 2018 from the comparable quarter last year, according to the Transportation Department.

That’s the most recent period for which data are available. But travel price prediction service Hopper also hasn’t seen much of a change in prices for the holiday season compared with last year, said chief data scientist Patrick Surry.

At least some of the recovered costs are coming from passengers. United, American and Delta all reported increases in the amount of passenger-related revenue they brought in during the third quarter of 2018, accounting for changes in the number of seats available and miles flown, compared with the third quarter last year.

While fares tracked by the Transportation Department have declined, they don’t include all the “extras” passengers might pay for, like a more desirable seat or checked luggage. Fees for bags and flight changes also declined in the first half of the year, according to Airlines for America. But this fall, JetBlue, United, Delta and American raised fees for the first checked bag by $5, to $30.

"They’d like you to focus on the low price, and what they’d just as soon not have anyone focus on is the billions (of dollars) in additional fees they drive for the ancillary services that get people what they really wanted to begin with,” said Robert Mann, a New York-based airline industry consultant.

Airlines have other ways of covering higher fuel bills, Heimlich said. Those include efforts to use less fuel _ like Delta, which said new, more efficient aircraft helped offset higher prices _ while keeping other costs low, cutting less profitable flights, and bringing in more credit card and cargo revenue.

Delta CEO Ed Bastian declined to speculate on future airfares during a call with investors last month. But he said Delta expects to continue being able to pass along the cost of any future oil price increases, pointing to the strong economy and “very healthy” demand for Delta’s product.

Still, airfares are expected to rise as the busiest days of the holiday travel season approach. Fares for domestic flights around Thanksgiving began increasing about a month before departure last year, while Christmastime airfares rose gradually through November before rising more rapidly in the two weeks before the holiday, according to Hopper.

Airlines for America said it expects U.S. airlines will fly 30.6 million passengers between Friday and Nov. 27, up from 29 million during the Thanksgiving travel period last year. That’s an estimated 2.55 million passengers per day, ranging from an estimated 1.73 million on Thanksgiving Day to 3.06 million the following Sunday.