If you wanted to travel somewhere this summer, but you found yourself priced out of the market, it might be time to start looking at fares again.
The nation’s airlines have faced a really tough cycle with rising fuel cost. You think you’re suffering from the high price of gas? Well, the biggest part of an airline’s budget is typically fuel costs. It often accounts for a greater chunk of money than even payroll.
Every penny rise in the cost of jet fuel (kerosene) makes a massive difference to the cost structure of an airline. Airlines see an almost instantaneous hurt from just the tiniest increase in oil prices. So the run up in jet fuel has been just brutal.
The airlines have tried a variety of strategies to cope with rising costs of kerosene, including fare increases and parking planes.
Fare increases were the first line of defense and the latest I’ve seen is that summer fares are up by about 17%. But they’ve been getting a lot of price resistance on those kinds of fare hikes.
So then they turned to grounding airplanes. Delta is the latest and they’ll dramatically reduce service at the end of the summer. I also expect possible attempts by Delta to get people to take leave or furlough. Likewise, American Airlines announced just days ago that they’ll park all their old MD-80 aircraft, which burn fuel like maniacs.
But it takes months for an airline to figure out what to do as a business strategy and then implement that course of action. In the meantime, the airlines have all these seats and not enough people to fill them.
The result is that MarketWatch reports the airlines are doing discount sales very close to departure. Hotwire is selling 4 times as many deeply discounted last-minute seats as they were a year ago. That’s a big increase.
If you have a hankering to travel somewhere and it seemed too expensive when you last checked, try and try again. You may find great deals, particularly if you can go on a moment’s notice.
Have a bag packed and be ready to go. I always have a suitcase packed and I can be out the door in less than 5 minutes if I see a fare I like!