Airlines to Expand Surcharges for Holidays

Friday, November 20th, 2009

Major airline carriers, such as American Airlines and Continental Airlines, are expanding their surcharge fees for peak travel dates this holiday season. It's anticipated that these fees will remain in place until May 2010. Travel experts say that airlines are able to generate more revenue on days that get a high number of travelers even after the holidays.

Surcharges began appearing in September when American Airlines designated dates for peak holiday travel days. United Airlines, Delta Air Lines and its Northwest Airlines subsidiary are charging $10, $20 or even $30 above the published base fare on designated dates, said Ryan Berryman, senior vice president of Oversee.net, parent of travel search portal LowFares.com.

Continental's spokeswoman, Mary Clark, and American Airlines spokesman, Tim Smith, also confirmed that those carriers will have similar charges as well.

Berryman added that surcharges are "simple economics." "There is definitely higher demand for travel on these dates," he said. "In addition, airlines have reduced their capacity considerably due to the economic environment. These two factors lead to higher prices during high-demand periods."

United's Robin Urbanski acknowledged that peak travel days require additional staffing to "ensure our almost 10 million customers who are traveling during the holidays are accommodated" and though the surcharge appears as a separate cost, the fee is "a limited fare increase." She added that the fees only impact certain dates and surcharge-free fares are will valid on non-peak days.

Berryman cautioned that the carriers could introduced additional surcharges. "As airlines get a better sense of consumer demand for individual dates and the pricing actions of their competitors, I would expect to see further activity," Berryman said. "We have seen instances of surcharges extending into next year for spring break and Super Bowl weekend."

Other airlines are adding a steep $50 surcharge for flying on February 8 - the day after the Super Bowl.

US Airways began a 5 percent surcharge for flights beginning May 8 that is related to anticipated fuel costs rather than peak travel dates. Other air carriers may follow suit.

Typically, surcharges aren't always disclosed on airlines' websites' advertised or posted fares. They will appear later in the booking process.

Travel experts explained that airlines have viable business reasons for using surcharges rather than a black-and-white fare increase. When an airline changes a fee, it must report the change to the Airline Tariff Publishing Company incurring administrative costs.These costs are not applied if the base fare is intact and a surcharge is added.

"The practice also allows the airlines to target price changes more precisely to specific markets and times," Berryman said. He advised that travelers can help themselves, find some bargains and save some money by comparison shopping using third-party booking sites rather than the airlines' sites.

"Be a smart consumer," Berryman said. "The best way to avoid surcharges is by being flexible with your travel schedule. The second best way is by planning ahead and frequently searching for fares prior to booking. ...A surcharge that you may see today may not be there tomorrow."