Expect higher airline tickets this fall

(June 12, 2009 - DTB) - Hartford Courant - Airlines are facing significant challenges as ticket sales of premium seats are down, overall demand continues to be weak and fuel prices are on the rise. The result is expected to be fare increases, capacity cuts or both. The one-two-three punch could be bad news for consumers this fall, as U.S. airlines face pressure to raise fares or cut more capacity to cover their costs.

If fuel prices continue to climb into the fall, airlines will be under pressure to raise prices or cut more capacity to cover their costs, Delta President Ed Bastian said. Delta has made a decision not to "put seats out into the marketplace if we can't recover the cost of that seat," he said.

Experts have said they don't expect fare sales to end anytime soon, given weak demand for air travel.  The rise in unemployment and hits Americans have taken to the value of their homes, coupled with the meltdown in the financial markets, has caused a significant slowdown in air travel. Airlines also have lost business from the swine flu, which has caused some people to cancel travel plans to Mexico.

All the major airlines have cut back on seats, with more capacity reductions slated. Fewer seats in the air translates into fewer options for travelers, in the form of routes not being served anymore by an airline or an airline flying smaller planes to a destination or cutting the number of flights to a destination.

At an investor conference on Thursday, most airline executives offered a dismal outlook, but AirTran offered a rare bit of good news. The carrier's chief financial officer said AirTran expects to have "one of the best years in the company's history."

Executives at several airlines, including Delta, Southwest, US Airways, Continental and American, gave bleak outlooks Thursday during an investor conference in New York, and there was little talk from anyone of a near-term rebound. AirTran offered a bright spot amid the industry woes, as its chief financial officer said the discount carrier expects to have "one of the best years in the company's history."

Harry R. Weber - AP

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