High Fuel Prices Mean Higher Airfares
May 7, 2006 — -- Businesses of all kinds, from cruise lines, to UPS, to Papa John's pizza are passing along increased fuel costs to consumers, and airlines have recently raised ticket prices to their highest level since Sept. 11.
Those airfares will not be dropping anytime soon. Even low-cost carriers have been raising fares since January, and travelers are feeling the effects.
"I have seen a 20 percent increase in ticket prices," said Ines Lormand, a frequent business flier in Houston.
Her recent $900 round trip ticket to Detroit was a shocker. Last year, she says, the same trip was $300.
She worries now about next week.
"It is going to squeeze my travel budget," she says. "Somehow, I don't know how, we're going to do it."
Business and leisure travelers are smart to worry. Analysts say recent fare increases are only the beginning as the skyrocketing fuel prices threaten the airlines' already shaky balance sheets. For the nation's biggest airline, American, every penny increase in the price of jet fuel adds another $28 million a year in costs.
"It's caught a lot of people by surprise," said Capt. Steve Chealander. "As you look back three years ago, look at what we were paying for jet fuel."
According to the Energy Information Agency, jet fuel cost about 82 cents a gallon three years ago. Today it costs $3.45.
To save fuel, airlines are taking unprecedented steps to lighten their planes. American cut onboard water by one-fourth, saving $3 million this year. Taxiing with only one engine running has saved another $8 million. Airlines are also saving millions each by removing extra dishes and catering carts. But those savings aren't enough.
"We're probably going to see ticket increases along the $5 one-way, $10 round-trip area, probably $5 or $6 more throughout the summer," said travel expert Terry Trippler.
ABC News' Bob Jamieson reported this story for "World News Tonight."
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