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Given recent airfare rates, you won’t be surprised to learn airlines are expected to turn an $8.9 billion profit this year. That’s according to estimates released by an industry trade group called the International Air Transport Association (IATA) earlier this month.
IATA CEO Giovanni Bisignani called the profit margin “razor-thin.” Well, it’s sure taking a razor to our already skinny wallets: average airfare prices per mile were up 14 percent in August over last year’s.
And nobody can forget those fees that airlines have been tacking on, which account for a large chunk of their profit – especially baggage fees. Those netted $893 million in just the second quarter of 2010. If that doesn’t make you airsick, you can read a more detailed breakdown of airline profits provided by the U.S. Department of Transportation.
But why is the fare itself getting so expensive, and what can you do to save? With the average annual cost of plane fuel staying stable, the real reason for the high cost of flying is that airlines are cutting back on flights to keep planes full. IATA calls this “disciplined capacity management … leading to sharply stronger yields.” In other words, fewer flights means more packed planes and fewer discounts. Struggling carriers are also merging or falling out of competition – just this week Southwest agreed to buy Airtran – and less competition often means higher prices. You can’t do anything about that, but here are some tips to make your holiday travel more affordable:
There’s a reason Southwest is one of the nation’s most popular – and profitable carriers. They’re often the least expensive and they don’t charge baggage fees. Plus, the Department of Transportation ranked Southwest the best based on the number of consumer complaints received this year – just 149 in the first half of 2010. (The worst? Delta, with 1,175.) Note that you can only book Southwest tickets at their website: their flights don’t show up on sites like Orbitz or Expedia.
Join some airline sites
You don’t have all day to surf around looking for deals. Choose a few airlines that you’re likely to fly and sign up to receive promotions via email. Do it now, so you have at least a little time before you’ll need to book your holiday flight.
Check out coupon codes
While these codes are usually for package deals (hotel + flight) sometimes you can find a discount coupon at sites like retailmenot. Don’t get your hopes up, however: a lot of the codes are for travel sites rather than airlines and some are simply silly. (Example: on one site I visited they had a “coupon” for free luggage on Southwest – something that’s already free.)
Book early, not late
Some people wait until the last minute, hoping discounted seats will open up. Don’t count on that this year, because the high demand will eat up that limited supply. IATA expects this year’s demand to be 11 percent higher than last, but it predicts capacity will expand by a mere 7 percent. If you wait, you might find fares doubling. Or worse.
Fly mid-week, not the start of the week
Some airlines charge extra fees depending on the day you travel. Tuesday and Wednesday flights are generally $20 cheaper each way than Sunday or Monday flights. If you’re booking multiple tickets for the family, that can add up.
Take a few extra days off
If you want to pay as much as possible for your air travel this holiday season, fly when everybody else is trying to – the days immediately before and after the holiday. If you want to pay less, travel when everybody else isn’t. Arrive a few days earlier and/or stay a few days later. Since Christmas and New Year’s are both on Saturdays this year, consider not flying out for a day or two. More time with family – which could be a blessing or a curse – and more money in your pocket.