Airfare Skyrockets 13 Percent for Summer Season

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This summer, it may be hard to land a cheap airfare deal. Bloomberg News reported yesterday several air carriers are charging 13 percent more for airfare during the peak summer season. Delta Air Lines and American Airlines are just two airlines increasing prices as fewer seats and more travelers returning to the skies is restoring industry pricing power.

Online travel agency Travelocity.com found round-trip airfare jumped to $471 from $415 during the same time last year. This price point is based on tickets for both domestic and international flights.

Airfares For Top Summer Destinations

(Destination, Summer 2010 Average Ticket Price, Fare Change from 2008)

Orlando Area, $259.05, 0.1%
Las Vegas, $333.20, 12.6%
Seattle Area, $365.04, 9.3%
New York City Area, $354.12, 0.4%
South Florida, $303.33, 1.2%
Los Angeles Area, $349.12, 4.9%
Cancun, Mexico, $414.85, -0.8%
San Francisco Bay Area, $351.75, 8.0%
Denver Area, $289.40, 5.5%
Washington DC Area, $301.11, 11.6%

Source: Travelocity.com
The summer season, traditionally the most profitable time period for airlines, saw average fares drop 11 percent a year earlier. The recession also forced airlines to park 500 jets over the past two years, according to Bloomberg.

The price increase is seen industry-wide as evidence of airlines' slow recovery. "There's a pent-up demand after people trimmed vacations or cut back on spending in 2009," said Travelocity.com Senior Editor Genevieve Shaw Brown to Bloomberg in an interview. "People have more confidence about spending on their vacations this year."

According to Shaw Brown, a Travelocity.com survey of 2,000 customers found 49 percent are planning to travel more this year. The online travel agency defines the summer season from Memorial Day weekend through Labor Day in September.

Travelocity.com data showed Orlando, Florida is the cheapest summer season destination with fares averaging $259 round-trip -- a price unchanged from last year. Las Vegas has the steepest price increase, with a 13 percent hike to $333, followed by the Washington area with a 12 percent increase to $301. The only destination on Travelocity.com's list of top summer destinations that saw a price decline was Cancun, Mexico, at $414 a ticket, down less than 1 percent.

The price of crude oil is also on the rise, today reaching a 17-month high of $86.62 per barrel in New York. If the price of oil continues to increase, carriers may add surcharges to the price of tickets. In 2008, oil reached $147 a barrel, causing airlines to add fees of $50 or more on some domestic flights, and more than $300 on overseas routes.

"We'll see fuel surcharges come back any minute now," said Hunter Keay, an analyst of Stifel Nicolaus & Co. in Baltimore to Bloomberg.

There is some good news for tourists: room prices have changed very little from a year earlier. According to Shaw Brown, rooms are averaging $165 per night, down 12 percent from 2008. Shaw Brown reasoned hotels are unable to cut capacity the way airlines can, and called 2010 "the year of the hotel deal."
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