Airfares are lifting off because of rising oil prices. These tips could save you money. – CBS News
The cost of taking a flight in the U.S. is starting to take off because of rising oil prices stemming from the Iran war, which has already sharply boosted the cost of driving a car.
A recent analysis of U.S. airline ticket prices by Deutsche Bank analysts found that average domestic airfares for travelers booking flights later this month have climbed by between 15% and 124%. The cost of a flight on discount carrier Spirit Airlines for late-March had jumped from $86 to $193, the analysis found.
The average fare for transcontinental flights has jumped over 100%, while flight prices to the Caribbean, Florida and transatlantic destinations have also risen, according to the investment bank.
Jet fuel fees
With jet fuel costs increasing, some airlines have added surcharges to offset higher oil costs. Deutsche Bank said that sustained elevated price levels for jet fuel could pose an “existential threat” to the airline industry, noting that carriers often cut routes and ground planes when fuel costs become excessive.
Australian airline Qantas and Scandinavian Airlines have both recently added fuel charges to ticket prices.
“Qantas International is increasing fares this week in response to rising costs, including the significant increases in jet fuel prices. These increases will vary from route to route,” the airline said in a statement to CBS News.
SAS also said it had introduced “a temporary fuel-related price adjustment.”
To be sure, airlines aren’t passing all of the added costs to consumers. If demand erodes, carriers will face pressure to make their fares more affordable, said Khalid Usman, an aviation expert with management consulting firm Oliver Wyman.
“Increases in pricing can lead to demand destruction, and fewer travelers is not good for the airline,” he told CBS News.
Here are some tips from experts on when to book to get the lowest airfares as the conflict in Iran nears its second week.
Book early
If you have plans to travel over the next few months, lock in the lowest available airfares now, experts advised, noting that oil prices are expected to remain elevated or even rise further if the Iran war drags on.
“If oil prices continue to stay high, consumers can absolutely expect higher airfares,” Julian Kheel, creator of Points Path, a flight awards search engine, told CBS News.
Fuel prices account for about one-fifth of airlines’ operating expenses, he said, predicting that carriers will try to protect their bottom lines by raising fares.
“The only real way to offset that expense is to increase the cost of tickets,” Kheel said.
Consider a refundable ticket
Kheel also recommended booking the best-priced ticket now, while also considering buying a changeable or refundable fare in case the conflict ends and fares drop.
“If oil prices do drop and airfares fall in response, you’ll be able to rebook and capture that lower airfare,” he said.
The sweet spot for scoring the best fares is typically about one to two months before travel, according to The Points Guy managing editor Ben Mutzabaugh.
“Some fares have already jumped significantly, and overall they are going up. So if you have a trip coming up, book now,” he told CBS News.
Monitor fares
Airfares are volatile even in normal times, so monitoring for price fluctuations based on supply and demand can also help consumers save money, according to Scott Keyes, founder of flight deals site Going.com.
“Fares are constantly ping-ponging around, but because they’re so exposed to the changing price of oil, that’s adding to the volatility,” he said.
Although it’s premature to search for fares for, say, holiday period travel or next year’s spring break, now is a good time to book summer trips, Keyes said. If ticket prices drop down the road, travelers can call their airline and ask for the difference in credit, he noted.
“Airlines allow you to take advantage of price drops, but you don’t get cash back, you get credit,” Keyes said.
Consider using points
Airfares will sometimes increase when bought with cash, but remain steady in their consumption of points, miles or other travel rewards, Keyes said. That helps customers get more bang for their buck by redeeming such incentives,
Before booking a flight, compare the cost in dollars versus points if you have them, he advised. Mutzabaugh noted that miles and points are typically deposited back into customers’ accounts without penalty, while cash refunds may come with a fee or are only returned in credit.
