Are air fares too high?

ATLANTA — Some airline experts are beginning to ask when plane fares will become too high for financially strapped passengers, who Thursday learned that major U.S. carriers are tacking on yet another fuel surcharge.

Atlanta-based Delta, United and American have added a $20 round-trip fuel surcharge for most domestic routes, and other major carriers are expected to soon follow suit.

The price of jet fuel has soared this year as crude oil prices continue to set new records. Most carriers have announced a wave of fuel surcharges in recent months in an attempt to keep pace with fuel prices.

"It's important we price our product to keep pace with our costs," said Delta spokesman Kent Landers.

But the people who study airfares say there is a danger that airlines will push fares so high that some people could begin to cut back on air travel.

Rick Seaney, CEO of the Web site FareCompare.com, said he doesn't think ticket prices have yet reached the "tipping point" where passenger demand drops.

"We are getting really close to it, but I'm not sure we're there yet," he said.

Most major U.S. carriers have added fuel surcharges of more than $100 over the last year, Seaney said. Delta, United and American have added surcharges of about $130 round-trip for many domestic routes.

"I think there could be two or three more $20 increases before they really begin to lose customers," Seaney said.

The surcharges have had little impact so far on Delta's bookings, which in April were running slightly ahead of April 2007.

"We continue to see strong advance booking and are achieving record load factors," Landers said. "We're pleased with our advanced bookings for summer."

Seaney said leisure passengers likely would be the first to limit their flight plans because of higher ticket prices, followed by small-business travelers.

"And if the economy continues to falter, you could see some cutback in corporate travel," he said.

Air Transport Association spokesman David Castelveter said cargo and passenger airlines spent $16 billion for fuel in 2000, $42 billion in 2007 and will probably fork out more than $60 billion for 2008.

"The carriers are playing catch-up," said Castelveter, whose organization represents the major airlines. "The reality is the price of a ticket is increasing, but not nearly enough to offset the cost of fuel."

Airlines have been on a desperate hunt this year to cut costs and push fares higher. They have parked some planes to cut capacity and have reduced their domestic growth plans.

Some carriers, like Delta, also have increased the percentage of their business that comes from more profitable international routes. About 35 percent of Delta's business now comes from international routes, and if it completes its proposed merger with Northwest, international routes will make up half of Delta's business.

Castelveter said the airlines not only are faced with unpredictable fuel costs, but with passengers who are being battered by higher prices for food and fuel for their cars. That further limits the ability of the airlines to pass on increased costs to customers, he said.

"They must be very cautious that they don't get to the point where a customer will say it's just not cost-effective to fly," he said.

Jim Tharpe writes for The Atlanta Journal-Constitution.