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US airfares on the rise, outpacing inflation

By WTOP Staff

SCOTT MAYEROWITZ
AP Airlines Writer

NEW YORK (AP) — Travelers, prepare to pay more for your flight.

The average roundtrip ticket within the U.S., including taxes, reached $509.15 in the first six months of this year, up nearly $14 from the same period last year. Domestic airfare continues to outpace inflation, rising 2.7 percent compared to the 2.1 percent gain in the Consumer Price Index.

Airfare has gone up 10.7 percent in the past five years — after adjusting for inflation — according to an Associated Press analysis of data from the Airlines Reporting Corp., which processes ticket transactions for airlines and more than 9,400 travel agencies, including websites such as Expedia and Orbitz.

The formula for rising fares seems simple, but it eluded the airlines for years: Match the supply of seats to passenger demand.

“Airlines have reduced the number of seats while more people want to fly because of the economic recovery. All this leads to higher airfares,” says Chuck Thackston, managing director of data and analytics at Airlines Reporting Corp. “This trend in airfares is likely to continue for the near future, as the economy continues to grow.”

These days, fares only capture part of the cost of flying. Many passengers pay extra to check their luggage, typically $50 roundtrip for the first bag and $70 for the second one. But bag fees haven’t changed much in the past few years. Now, the airlines are increasingly enticing passengers to pay for fast-track security lines, early boarding, additional legroom and other extras that can add from $9 to $299 to the cost of a flight.

So, for example, a $300 ticket can balloon to $450 on some airlines if you check two bags and pay $30 for a little more room to stretch your legs.

And travelers aren’t finding much relief after landing. The average nightly price of a hotel room in the U.S. during the first half of this year was $113.80, according travel research company STR. That’s up $4.47, or 4 percent, from the same period in 2013.

Most people are traveling for work. And when the economy is strong, they do more flying. Data released by the government last week shows that economic growth bounced back after a brutal winter, businesses are creating jobs at a steady pace and consumer spending is on the rise.

The Global Business Travel Association predicts that worldwide business travel will grow 6.9 percent this year to a record $1.18 trillion. The United States is the business largest travel market, with travelers spending $274 billion last year, a 4.5-percent increase over 2012.

Baggage fees and some others were introduced in 2008 to offset losses from rising fuel prices. However, this year airlines are actually paying less for fuel — $2.96 a gallon so far, 7.2 percent less than last year, when adjusted for inflation.

Passengers aren’t seeing any of those savings. One reason is that airlines no longer need to entice fliers with lower fares. There are simply fewer choices today.

A wave of consolidation that started in 2008 has left four U.S. airlines — American Airlines, Delta Air Lines, Southwest Airlines and United Airlines — controlling more than 80 percent of the domestic air-travel market. Discount airlines such as Allegiant Air and Spirit Airlines have grown at breakneck speed but still carry a tiny fraction of overall passengers.

That control of the market has enabled the bigger airlines to charge more for tickets and not worry about being undercut by the competition. In addition, the airlines are taking in about $3.3 billion a year in fees. The result: record profits.

In April, May and June, the four largest U.S. airlines earned a combined $2.9 billion. Airlines are earning so much money that they are starting to pay investors dividends — something unheard of in an industry that just a decade ago was struggling with a wave of bankruptcies.

Airlines for America, the industry’s U.S. trade and lobbying group, says passengers should blame the government, not the carriers, for higher fares. Last month, increased fees linked to the Transportation Security Administration took effect. Fliers will now pay a flat fee of $5.60 each way, up from $2.50 each way for nonstop flights and $5 for trips with connections.

But taxes and government fees still remain a small portion of what passengers pay. On a $500 roundtrip ticket between New York and Seattle, they make up 12 percent of the price.

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Scott Mayerowitz can be reached at http://twitter.com/GlobeTrotScott.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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