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Airfare increases 'inevitable' during summer

Think flying has gotten more expensive recently? Just wait until this summer.

Increases in airfares are "inevitable" this summer to help airlines absorb soaring fuel costs, the head of the Air Transport Association predicted Tuesday.

James May, the trade group's president and chief executive, said a rise in passenger ticket prices is unavoidable as airlines struggle with unprecedented increases in the cost of fuel. Jet-fuel prices, he said, could approach $170 a barrel, which he described as "absolutely uncharted territory."

Fares have not kept pace with fuel prices, according to the group, which represents the nation's leading air carriers. In March, for example, fuel prices jumped nearly 70 percent, while average domestic fares rose just over 7 percent.

Still, demand for airline travel is expected to be heavy this summer, May said. He forecasts a slight drop in passengers from June 1 through Aug. 31 compared with the same period last year.

About 211.5 million passengers are expected to fly this summer, down 1 percent from 214.2 million passengers during the same period in 2007. May attributed the drop to a weakening economy, fuel costs and cuts in airline capacity, but he said planes will nevertheless be relatively full.

That matches what American Airlines is seeing for the second quarter, which includes June, company officials said. Although the Fort Worth-based airline is planning to cut its capacity this year, those reductions won't come until the fourth quarter, spokesman Tim Wagner said.

"Summer travel will be summer travel," he said.

Tom Horton, American's chief financial officer, said recently that the airline is watching passenger demand.

"We're keeping an eye on it, given the growing concerns about the economy," Horton said during a recent conference call with reporters and analysts.

Southwest Airlines, based in Dallas, is also predicting heavy travel. June bookings "look strong," CEO Gary Kelly said during a conference call.

Others, however, saw signs of a travel slowdown that could affect airlines. Market research firm TNS said Tuesday that 1 in 4 Americans reported decreased or canceled travel plans in 2008. Survey respondents cited high gas prices as well as worries about the economy as reasons.

May and Greg Principato, president of Airports Council International-North America, said the nation's airlines and airports are working in tandem to deal with delays and other problems that they said could make for "a challenging summer."

Principato said that airports nationwide, in an effort that started with discussions at Dallas/Fort Worth Airport last fall, are developing emergency plans to help stranded or delayed passengers.

Measures include keeping at least one food vendor open around the clock and distributing cots, sleeping mats and blankets to passengers forced to spend the night, he said.

May said airlines are working with the Federal Aviation Administration to stem congestion in the New York-Philadelphia corridor, which is blamed for many of the delays nationwide.

Although weather is generally the biggest factor in delays, thousands of passengers were stranded in recent weeks when American Airlines and several other carriers were forced to ground flights to make repairs mandated by the FAA.

"We hate delays," May said. "We want to do everything we can to cure them."

May said delays are expected to cost airlines at least $10 billion this year. Commercial carriers are looking at ways to save fuel, he said, including slowing planes in flight "a little bit" to increase fuel efficiency.