Fliers Pay More Peak-Day Surcharges

Aug 17th, 2010 | By businessnews | Category: Business

August 17, 2010, 1:32 PM EDT

By Mary Schlangenstein

Aug. 17 (Bloomberg) — Travelers may pay as much as $60 more to fly in the U.S. through the end of 2010 as carriers including Delta Air Lines Inc. and American Airlines increase use of surcharges amid rising summer and holiday demand.

Round-trip charges of $20 to $60 are set for as many as 33 days still this year, or almost one out of every four, according to Tom Parsons, chief executive officer of Bestfares.com, and Graeme Wallace of FareCompare.com.

U.S. airlines are seeking to bolster earnings after posting their first collective quarterly profit in 2 1/2 years, helped by a rebound in business travel, bag-check fees and surcharges. Passengers often see surcharges as part of the fare and may not know why the ticket is priced higher, said Wallace.

“It’s not transparent,” Wallace, chief technology officer at Dallas-based FareCompare.com, said in an interview. “If you’re looking at travel on a particular day, you have no idea why it’s $400 on that day. You don’t know it’s $340 the day before or $350 the day after.”

The extra fees will be charged Aug. 1 to Aug. 22; Sept. 2 and Sept. 3, the two days that precede Labor Day weekend; Nov. 19 to Nov. 29, which surround U.S. Thanksgiving, and Dec. 17 to Dec. 31, except for Christmas Day, according to Bestfares.com, based in Arlington, Texas.

Airlines traditionally have offered higher fares on peak demand days, said Trebor Banstetter, a spokesman for Atlanta- based Delta. Many carriers switched to surcharges last year as newer computer systems and pricing rules allowed the extra amount to be added on certain days without altering the base fare. The process is simpler than raising millions of base prices on each of the fare levels normally sold.

‘Less Cumbersome’

“This is a less cumbersome fare to file and monitor administratively when the filing involves a relatively small number of fares and specific dates,” said Tim Smith, a spokesman for AMR Corp.’s American.

To find surcharges, a passenger must generally look up the total ticket price on an airline’s website, click on a “Fare Rules” link and scroll down through the text for specifics.

Low-fare carriers Southwest Airlines Co., JetBlue Airways Corp., AirTran Holdings Inc. and Virgin America Inc. don’t use the peak-day surcharges, Parsons said.

Counting all of August, there are 49 days with surcharges in the five months through Dec. 31, according to Bestfares.com. That compares with 41 days in the six months from Nov. 17, 2009, when carriers first began using the surcharges, to May 28, 2010.

Carriers also stepped up the use of surcharges this spring and summer, applying them on 19 days in March and most days from June 15 to Aug. 22, Parsons said.

‘Insult to Injury’

This year, airlines are also offering fewer seats at the lowest fares during the peak holiday travel period, said George Hobica, president of New York-based Airfarewatchdog.com.

“You might think of it as adding insult to injury,” Hobica said.

Some carriers have entirely eliminated discount fares on peak travel days, Parsons said.

Surcharges are in place for Jan. 1 to Jan. 3 next year, and US Airways Group Inc. has a $50 surcharge on flights from Dallas-Fort Worth International Airport on Feb. 7, the day after the National Football League’s Super Bowl is played in nearby Arlington.

Separately, Delta and US Airways have added a 5 percent surcharge beginning Jan. 8.

The charge is “on a limited number of domestic routes and is not applicable across our system,” said Kent Landers, a Delta spokesman. James Olson, a US Airways spokesman, declined to discuss pricing.

Fare Sales

Fall fares are higher than a year ago, although they remain below 2008 levels, said Genevieve Shaw Brown, senior editor at Travelocity.com. An average domestic round-trip ticket costs $320, compared with $284 in 2009, she said. An average international round-trip fare is $769, up from $643, Brown said.

Carriers are likely to have fare sales to help boost demand during the traditionally slow travel period in September and October, after school resumes, she said.

For the holidays, Nov. 22 and Nov. 26 will probably have the lowest fares for a Thanksgiving trip, with Dec. 21 and Dec. 28 best for Christmas, Parsons said.

–Editors: Andrea Snyder, John Lear

To contact the reporter on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

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