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Airlines: People Won't Fly, So We'll Raise Fees

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The struggling industry seems to have a supply-and-demand problem.

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Airlines say it's the right time to fly, touting cheap fares and less crowding, but special holiday fees could keep travelers grounded on Turkey Day and well into next year.

The Air Transport Association, an industry trade group, released data Friday that showed that 3% fewer people took to the skies during the month of October, despite ticket prices being down 12.5% year-over-year. This pushed passenger revenue down for the 12th straight month.

The data, which was based on a random sampling of the member airlines, showed current prices to be on par to prices during the 1998 traveling season at an average cost of $301 per ticket.

"With US unemployment surpassing 10% in October, these results for air travel demand come as little surprise. Economic conditions suggest that pressure to generate revenue will remain intense for the foreseeable future," said ATA Chief Executive James C. May.

The decline in customers has pushed many airlines to ground planes, making fewer seats available for those who do want to fly and causing fares to skyrocket when only a few of those seats are left available on holiday flights.

According to the US Department of Transportation's Bureau of Transportation Statistics, 5.9 million domestic flights have taken off in the US in the first eight months of 2009, down from 6.8 million in the same time period of 2005.

There are 80,000 fewer seats available this year on flights traveling to the top 50 busiest US cities on the Wednesday before Thanksgiving compared with last year, a 3.4% decrease, according to FareCompare.com

"Fewer passengers are traveling from month-to-month," says ATA representative Elizabeth Merida. "And even though it's a holiday and a time when people travel to be with family, fewer people are doing it by air." She added that the ATA said it expects air travel to be down by about 4% from the year prior during this holiday season.

Yet, despite the fall in demand for air services, airlines are still upping fees on tickets, tacking on fees of $10 and $20 per ticket to travel during the holiday season. These peak travel surcharges occur for Thanksgiving on November 29 and 30 and December 18, 19, 23, 26, and 27 for Christmas.

US airlines have charged more than $3 billion in fees so far this year, according to the New York Times.

Airlines are even adding dates to the list of days that they consider "holidays" now, even charging fees for flying on the start of daylight savings. Rick Seaney, co-founder of FareCompare.com, reports that there are now 30 "special fee" days in 2010. Delta/Northwest (DAL) plans to add a $50 fee to the price of tickets to certain cities on Feb. 8, the day after the Super Bowl. US Airways (UAUA) announced Thursday that it will be adding a 5% surcharge to flights beginning in May to offset rising fuel prices. And Continental (CAL) just added $30 fees during peak travel days in March and April, matching moves by carriers like Delta, United, and American Airlines (AMR).

Sherman'sTravel.com expert Elissa Richard recommends passengers keep baggage and food fees in mind when traveling during the holidays. She says that gifts and other packages can become hefty expenses when you have to pay to check them.

"We're not seeing a huge difference in the price of tickets this year as compared with other years," she says. "The fees are balancing out the price."
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