Say Good-Bye to Cheap Air Fares

The CEO of British Airways was on CNBC this morning talking about the new terminal they’re building for $30 million at JFK. It will be state of the art- where they’ll be able to “pamper” their most affluent travelers.

He was asked about oil prices and what that meant for ticket prices and he didn’t mince words.

Ticket prices will be going up.

How much?

British Airways hedges about 85% of its fuel costs. And even with the hedging, their fuel costs will rise from $4 billion to $6 billion this year. What’s a company to do except raise prices sharply.

Many of them are also going to cut routes because flying the planes are unprofitable. So if you live in, say, Des Moines or Rapid City, you’ll pay even more for fares because there will be far fewer planes serving those routes.

I just looked up a round trip ticket from San Francisco to Newark on United Airlines for mid-July. It’s priced at $414 round trip. That’s not bad at all. That’s what you would have paid a year or two ago (that’s a non-stop flight in the middle of the day.)

But to go from Portland, Oregon to Newark, which is a less serviced airport than San Francisco, it will cost you $665 on United (there might be another airline that would be cheaper.)

Remember when you could just fly somewhere for the weekend for $200? Those days will soon be gone. It might cost you $400 or $450 now.

For a family of five to fly, it could cost over $2000 just for the tickets alone.

Return of the road trip?

We may see more families and vacationers turning to the mini-van, even WITH the high gasoline prices. Local resorts could benefit. Las Vegas and other destinations, where you would normally fly to, are already feeling the pinch.

It’s only going to get more expensive.

The era of “cheap” air fares is over.