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Flying Home for the Holidays? Buy Early or Pay More

Many airlines are planning expensive surcharges on top of recent fare increases.

Travelers who want to spend Thanksgiving or Christmas with distant relatives or just get away from it all will pay more for airline tickets this year -- considerably more if they don’t buy early. In addition to “peak travel” surcharges of $30 each way, tickets bought in November and December will be $200 higher on many popular routes.

And that’s assuming tickets are available. Airlines continue to keep a tight lid on the number of flights, all but guaranteeing seats will go fast for the holidays. Nonstop flights will go first and will cost more -- typically $300 more. So shop now or as early as you can. And expect to pay a premium for air travel on Presidents Day and spring break as well.

Airports, meanwhile, are hoping for a strong holiday season. Airline cutbacks in the number of flights overall are taking an increasing toll on airports, even as the U.S. airlines go back in the black, with a $1.9-billion profit likely this year. Capacity cuts by the airlines mean less revenue from landing fees and rents for airports. Carriers show no signs of wanting to add more flights anytime in the near future. And with fewer passengers flying, there’s less revenue from concessions and parking. Revenue fell 16% last year, according to Airports Council International.

Hardest hit are small and medium-sized airports. The bigger facilities where airlines have hubs -- Dallas, Chicago, Atlanta, New York -- are doing better, but even they have tightened their belts. Airports in Tampa, Atlanta, San Jose, Calif., and Los Angeles have laid off workers, while Oakland, Calif., and Seattle have resorted to furloughs. Manchester, N.H., has a hiring freeze.


Many airport construction projects are on hold or scrapped altogether. Las Vegas’ plan to build a new airport is on hold, while in Columbus, Ohio, plans for a new terminal were axed. Other cost saving measures include deferring equipment purchases and delaying landscaping maintenance.

No great improvement is expected anytime soon. The airlines are in the driver’s seat and can oppose any hike in landing fees -- airports need the business and want to be well positioned if and when carriers decide to increase capacity. Federal funds from the Airport Improvement Program are declining, and a proposed increase in passenger taxes -- the Passenger Facility Charge, which airports use for construction and other projects -- is tied up in Congress because of disagreement over other aviation issues.

Airlines are also playing tough with labor unions as workers try to reclaim concessions made from 2002-2006, when the industry lost close to $50 billion. Now that the industry has rebounded, unions want their share -- including full restoration of concessions and more job security. The big issues are compensation, job security and retiree health benefits.

But company execs keeping a close eye on the bottom line will make no deals that could jeopardize their recovery. Razor-sharp competition with other carriers will keep the legacy airlines focused on reaching the level of productivity set by low cost carriers such as Jet Blue, Southwest and Air Tran.


American Airlines is in the hottest seat. It’s already at a $700-million cost disadvantage with the other legacy carriers because it didn’t go into bankruptcy and restructure its costs like the others did. Pressure is on to keep labor costs down. All of its major contracts, which were last restructured under industry pressure, are open for negotiation and are proving to be very contentious. The mechanics union recently rejected a contract offer, increasing the possibility of a strike. Flight attendant and pilot negotiations are proving thorny, too.

All of United’s major contracts are up for negotiation as well. Since the company went through bankruptcy, it is not under the same pressure as American, but talks will still be long and tough. And Delta faces more unionization. Flight attendants will vote soon to decide whether to unionize, and mechanics are expected to follow. If one or both of the groups decide on unionization, it would be two to three years before there would be a first contract ready for a union vote. The pilots’ union already has a contract with Delta.

Bottom line: Airline workers will have to settle for less than half a loaf.