The airline industry is enjoying the benefits of consolidation although gas prices continue to skyrocket. So far in 2012, there have been three fare hikes even though there were 11 increases so far between the years of 2010 and 2011. Crude oil has increased nearly 30% over the past six months. The increase in oil prices has been leading to less planes in the air and furthermore, more crowded seats. United has filled nearly 80.6% of its overall seats and all these costs are just being transferred to the customer. Some predict that airlines will try three to four more fare hikes before the summer travel season with sales only to help fill during the mid-peak times. Besides those that must fly due to business, I believe this summer will have sharp declines in flight revenue because the average four person family will have a hard time paying for such a flight. When the cheapest round-trip on average is $362 and this is in March, by the time summer comes around people could be finding the cheapest tickets being at least $400 per person. More families might resort to driving to closer destinations or holding off on vacations for a year or two to save money or wait for prices to decrease.
Read the full article at: http://www.businessweek.com/articles/2012-04-02/forget-gas-prices-air-fares-are-getting-more-painful
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