The average price of jet fuel in July was $4.06 a gallon. That is more than 3 1/2 times the $1.10 that airlines paid in July 2000, "a phenomenal, phenomenal increase," said Darin Lee, principal of LECG, an airline consulting firm in Cambridge, Mass.
"If the price of an airline ticket rises to the point where (airlines) cover their costs and earn a reasonable return, and fuel prices stay at their current prices or continue to rise, we'll enter a period where there'd be a lot of people who used to be able to travel who won't be able to travel," Lee said during a conference titled "Unfriendly Skies: Airlines in Crisis," sponsored by the Foundation for American Communications.
The industry analyst did not try to project where air fares would be. But he noted that the federal government projects crude oil costs are likely to remain in the $120-to-$130-a barrel range for the next seven years -- about double the cost of crude just two years ago.
As it is, major U.S. carriers are projected to lose a combined $10 billion this year, according to an estimate by the Air Transport Association.
US Airways and several other carriers have reacted to the fuel cost spiral by adding or increasing fees for checking bags or ordering in-flight beverages. But nearly all airlines have responded by reducing capacity, because cutting flights significantly reduces costs.
For instance, Delta Air Lines cut the most routes -- 132 between last November and those scheduled to be dropped this November, Lee said.
US Airways was second highest, reducing 73 routes in that period. That includes ending flights to destinations such as Altoona and Morgantown, W.Va.
Capacity cuts is the main reason planes are more crowded these days, Lee said. In 2001, an average 70 percent of seats were filled, compared with 62 percent in 1991. But that ratio was up to 80 percent last year, when "four out of five seats were filled," he said.
"This is something obviously that anyone who flies, is very, very familiar with," he said.
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