Airlines Raise Fees to Offset Rising Fuel Prices

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airlines, airline fees, travel fees, fuel prices, industry news
Airlines; Photo Credit: Esther Tuttle/Unsplash

The price of jet fuel has increased by 50 percent in the past year, which inevitably equates to pricier travel for the meetings industry.

Earlier this summer, several airlines announced the possibility of raising ticket prices and cutting new routes, and Delta Airlines and American Airlines even cut their profit forecasts, reported The New York Times. While fuel accounts for about 25 percent of an airline’s operating costs, an increasing reliance on fees in recent years has made it easier for larger airlines to absorb these costs. So, as the summer travel season comes to an end, larger airlines are still waiting to see what the market will look like before making any decisions about fares.

But smaller airlines, especially ones that have prided themselves on having less travel fees, are not fairing as well. JetBlue Airways, Alaska Air Group and United announced plans last week to raise various fees to help boost revenue. For instance, United plans to increase its fee for checked bags by $5. And despite being ranked in the top three as highest-rated airlines in customer satisfaction (after Southwest), JetBlue and Alaska are forced to make less customer-friendly decisions.

Alaska is launching a “Saver” fare by year’s end that will essentially be an economy-class ticket in which customers buying these tickets will only be allowed to select seats from the back of the plane, won’t be eligible for flight changes or upgrades, and will board last. Alaska is also doing away with its free flight change policy up until 60 days before departure, charging about $125 for changes any time they are made. It will also start charging extra for exit-row seats.

So, what could all of this mean for meetings?

“The higher flight prices show that there is an increased demand and strong economy,” says Cheryl M. Payne, CMP, CMM, senior director, global meeting services for Meeting Sites Resource. “If the economy is strong, business travelers will continue to travel and meetings will continue to happen globally. If fuel prices continue to increase long-term, we will definitely begin to see a shift in the marketplace and in the global meetings arena.  Corporations will start to take a second look at their spend before planning meetings.”

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