Rising Fuel Prices Leading To Higher Costs For Airlines At Logan
BOSTON (CBS) - The only thing rising faster than the price of a barrel of oil is airline ticket prices, at least that's what the management of the U.S. airlines hope.
Fuel accounts for more than a third of airline costs.
When the price hit $110 a barrel on Friday, US Airways took the lead this time and tacked on $10 to every flight. The stock market reacted the same day. Two of the biggest losers were United Continental, off 5.8 percent, and the parent company of American Airlines, retreating 4.5 percent.
Inflation in the price of food and loss of state jobs might lead to a slowing of the economy again and stay-at-home vacations this summer and less people traveling by air.
Low-cost airlines that do not have the luxury of profitable business travel and First Class seats may be hit the hardest.
A carrier like Spirit Airlines could face immediate problems, because they now charge for just about everything on a flight from Boston to their hub in Fort Lauderdale, with connections to popular Caribbean destinations. They attract passengers looking for the lowest costs.
The situation facing Spirit is the same as faced by SkyBus airlines three years ago. They flew out of Portsmouth, New Hampshire and offered free parking at the Pease Trade Port with service to smaller airports like St. Augustine, Florida for $89 each way.
At a Portsmouth Chamber of Commerce breakfast, the President of SkyBus said they could live with $90 barrel oil, were in trouble at $100 and were out of business at $120 a barrel. He turned out to be correct.
Logan's two major low-cost airlines, JetBlue and Southwest, are also watching the situation very closely and making decisions now for future fuel purchases.
The outcome of these decisions might be the cutback of the number of flights to certain destinations. Southwest might slow its expansion at Logan Airport to new cities.
My advice for travelers is to buy your tickets for summer travel as soon as possible.
Bob Weiss' 'All Things Travel' reports can be heard on WBZ NewsRadio 1030.
