Navigate / search

Fuel Costs and the Airline Industry

After writing yesterday’s post and reading more about oil prices and the airlines, one factoid from a Wall Street Journal column really stuck with me:

The change in oil prices from a year ago to today translates into $24.6 billion in added fuel costs for passengers and cargo airlines on an annualized basis, according to the Air Transport Association. That’s more than the industry has ever earned; the best year for profits at U.S. passenger and cargo airlines was 1999, with net earnings of $5.3 billion.

I absolutely can’t get this out of my head. After first hearing the news that American is going to start charging $15 for the first checked bag, my initial thought was: you have got to be kidding me! Then I came across this stat, one that I had not seen before in those terms, and I was, well, shocked. That $15 fee for my bag suddenly became insignificant as I put this further into perspective. The fact of the matter is, the cost of fuel is killing the airlines, and they’re doing everything they can to generate revenue.

The Best Way to Exchange Money Abroad

I’m leaving for France Saturday morning, so this week I’m doing the last-minute travel dash. Today alone I have realized that I don’t have comfortable footwear that is up to French standards, I don’t have a plug adapter, and I don’t know the best way to exchange money beyond our borders.

The last time I went abroad I hit up the ATM whenever I needed a few euros and it seemed to work like a charm. But the glow of my European vacation instantly faded when my bank statement arrived. I had blown a small fortune in ATM fees and other odd surcharges I hadn’t expected.

Photo courtesy of IgoUgo member linet.

American Announces Flight Cuts & More Bag Fees

If you keep up with travel news, you’re aware that the high cost of fuel is hitting the airline industry hard, forcing them to find ways generate revenue. To deal with surging operational costs, major carriers have had several solutions on their minds: fare hikes, capacity cuts and added fees.

We’ve seen several attempts (most successful) to raise fares over the past five weeks, and today American Airlines made flight reductions a reality, announcing that they will cut domestic capacity by up to 12 percent in the fourth quarter, a strategy to “significantly” cut costs and “create a more sustainable supply-and-demand balance,” Gerard Arpey, CEO of American Airlines, said.

What does this mean for consumers? For one, travelers can expect crowded planes; they can also expect to pay more for that seat, even though demand has declined, according to the Air Transport Association.

To further cope with the high cost of fuel, American said they will also start charging “low-fare customers” $15 for their first checked bag beginning June 15, a (somewhat) surprising move that comes on the heels of the second checked bag fee ($25) by major carriers. American also said they will raise fees on other services such as reservation help.

Five Ways to Find Cheap (er) Airfare

Recently, Travelocity reported that airfare was 12 percent higher for summer travel than it was last year. At the same time, the president of the Air Transport Association (ATA) told the Wall Street Journal on Wednesday that a rise in airfare was “inevitable.” What’s a traveler to do? Stay home this summer?

No way, I say.

For me, the thought of not taking a summer trip is too depressing to imagine. If the same goes for you, you’re likely looking for a way to save money on your next flight. Here are my five favorite tricks to saving money on airfare:

Travel Advisory: Mind the Mooch

Travel mooching: many are guilty of it (I’m talking to those of you in the back, trying sheepishly to avoid eye contact). They take that trip to Prague with a friend whose brother lives there and can offer free accommodations; they show a keen interest in visiting those distant relatives with a house in the Hamptons; they call up that high-school classmate they ran into over the holidays to announce—surprise!—that they’re planning to visit the city, but man are hotels expensive. Sound familiar? Few of us have escaped: it’s hard to avoid the advances of a mooch.

Photo courtesy of IgoUgo member vondrejech