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What's In Store For The Airline Industry In 2013?


Here's one headline we might see in the year 2013: Biggest airline merger ever. American Airlines and US Airways have been talking about such a deal for months. We'll also see - in the New Year, likely - some higher domestic ticket prices, and also some new planes.

NPR's Wendy Kaufman brings us up to speed.

WENDY KAUFMAN, BYLINE: A merger of American Airlines and US Airways would create the nation's largest carrier. Consolidation among the so-called legacy airlines would be essentially complete. Over the past several years, Delta has teamed up with Northwest, and United with Continental. The conventional wisdom is those mergers lead to higher fares.

But Jonathan Kletzel of the consulting giant PwC says that's not what the data show.

JONATHAN KLETZEL: Fares have definitely not gone up because of mergers, on the whole. You'll always find some individual markets where you can make that case, but on the whole and across the entire market, we just didn't see that.

KAUFMAN: He says typically, when a merger has left just a single carrier in a significant market, another airline has moved in to take its place. But Kletzel goes on to say...

KLETZEL: These mergers do have a short period of time where there's potentially operational disruptions associated with those mergers.

KAUFMAN: Indeed, United and Continental - which have finished integrating their operations - struggled mightily over the summer.

In July, fewer than 65 percent of the airline's flights were on time. Still, there were fewer flight delays overall this year compared to last, and fewer complaints about lost bags, probably because fewer passengers are checking them.

And what about fares? Rick Seaney, CEO of the online site FareCompare, says domestic fares were up an average of about 5 percent in 2012.

RICK SEANEY: And that's a reflection of seven domestic airfare hikes that stuck this year. Domestic fares have been just sort of creeping up gradually the last few years, but international airfare has jumped pretty dramatically.

KAUFMAN: Fuel surcharges and taxes are largely to blame.

Looking ahead to 2013, experts predict that domestic fares will increase another 5 percent this coming year. But Seaney says savvy shoppers can save money.

SEANEY: The cheapest time to buy your airline ticket is Tuesday afternoon, specifically at 3 PM Eastern time. Most airlines file sales on Monday night, all the other airlines scramble to match, and those cheap seats hit the reservation systems.

KAUFMAN: Another travel tip comes from Sarah Gavin at Expedia, the giant online travel agency: Don't book a flight and say to yourself: I'll worry about hotels and rental cars later.

SARAH GAVIN: There's no bigger mistake out there in terms of saving money on your travel.

KAUFMAN: Gavin explains that when flights, hotels and other things are bundled, companies can offer big discounts because they don't have to publically reveal the price they're offering.

GAVIN: I went to San Francisco. I stayed at a four star hotel on Union Square, and my hotel was essentially free. I ended up paying the same amount that I would have paid just for my airfare alone.

KAUFMAN: As for those ancillary fees, those pesky charges for things like luggage and meals, the airlines will continue to charge for them. They produce significant revenue. The good news for consumers here is that as the airlines make more money, the service they provide should improve. As Rick Seaney notes, brand airplanes are being added to the fleets.

SEANEY: These newer aircraft are much more airy. They're configured with bigger bin space. And anybody that's flown on a 20-year-old MD 80 versus a brand new 737 knows it's a better experience.

KAUFMAN: The traveling public can only hope 2013 brings better travel experiences. Airlines consistently rank near the bottom on surveys of customer satisfaction.

Wendy Kaufman, NPR News. Transcript provided by NPR, Copyright NPR.

Wendy Kaufman