Fly for Less

The airline industry is in a bind, and it’s putting the squeeze on you. But the squeeze isn’t coming from higher ticket prices -- lower demand caused by the recession has actually prompted airlines to cut fares 13% over the past year. (At last report, the average domestic fare was $301, compared with $346 a year earlier.) To boost bottom lines, airlines are levying extra fees, cutting routes and getting downright stingy with trips granted in their frequent-flier programs.

And the current low-fare window of opportunity could close quickly, says George Hobica, founder of Airfarewatchdog.com. Four factors could trigger price hikes, he says: An improving economy that spurs people to beef up their travel budgets, a spike in oil prices, the failure of a big airline or a step-up in airline mergers. This last scenario seems most likely. “As airlines continue to shrink, they’ll combine much more quickly,” Hobica predicts.

Regardless of airfares, extra fees and surcharges will surely rise. In the first six months of 2009, according to the Bureau of Transportation Statistics, U.S. airlines collected $3.8 billion in fees, a sneaky way of raising revenues without scaring off customers with fare hikes.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

Expect airlines to get even more creative in the coming year, charging for such “perks” as contact with a human being. U.S. airlines could take a page from the playbook of Ireland’s Ryan-air, which until recently charged passengers extra to check in with a live person at the airport, instead of online at home, at a hotel or at an airport kiosk. (In November, Ryanair stopped offering airport check-in altogether.) Also being considered: fees for flying with an infant -- currently, children under 2 fly free on domestic flights if they share your seat -- and fees for making reservations using a credit card other than the airline’s own.

The latest galling add-on is the holiday surcharge. Such fees first appeared in September, when some major airlines applied an extra $10 charge each way to fares on three of the busiest travel days for the 2009 winter holidays. A couple of weeks later, the charge bumped up to $20 each way and spread to another ten popular travel dates between the 2009 winter holidays and Memorial Day 2010.

But that’s not all. The surcharge now applies to nearly 100 dates from December 18, 2009, through October 17, 2010. The highest fee will be $50 for flights from three Florida cities -- Miami, Fort Lauderdale and West Palm Beach -- on February 8, the day after the Super Bowl in Miami.

Perfect Timing

Avoiding those peak travel days will save you more than just a surcharge. Less-traveled days, times and routes will also get you a lower fare. For example, the cheapest flights of the week are typically on Tuesdays, Wednesdays and Saturday afternoons. Early-morning flights will save you money, and they’re also less likely to be delayed. And flying into smaller airports -- for instance, heading to Manchester, N.H., or Providence, R.I., instead of Boston’s Logan Airport -- can cut your costs, too.

The timing of your purchase can be just as important when it comes to saving. Some fares fluctuate rapidly, so use the Web to help you catch them when they’re low. Alerts from Airfarewatchdog.com will notify you of low fares for your selected route, but not for specific dates. Alerts from Bing Travel (www.bing.com/travel) work well if you’re looking for flights on certain dates. At Kayak.com, you can set up alerts using either method. Neither Bing nor Kayak tracks Southwest Airlines; download its deal alerts at www.southwest.com/ding.

Where the Wild Deals Are

If you’re looking for a low-cost vacation, here’s a tip: Check regions of the world where local competition makes air travel particularly inexpensive. Tim Leffel, author of The World’s Cheapest Destinations, identifies Latin America (especially Central America) and Southeast Asia as the top two low-cost areas.

Leffel recommends Latin America first because it’s less expensive to get to hub cities and you won’t face any major problems with jet lag. To fly there on the cheap, try using lesser-known airlines. “People assume international trips have to be on some big airline,” says Leffel. “But these scrappy guys are doing the flights for less.”

Spirit Air, for example, flies out of Fort Lauderdale, Fla., to 14 destinations in Central and South America, often for under $250 round-trip. If you join the airline’s Fare Club for $40 a year, you’ll get offers for round-trip fares as low as $18, excluding taxes and fees. Little-known Copa Airlines flies from several U.S. cities to a number of South American countries through Panama City, a regional hub.

Airfare to Southeast Asia costs more, but once there you can fly throughout the region at bargain prices. Plus, prices for food, lodging and entertainment are also low. Leffel recommends starting in Thailand. From the U.S., flying to Bangkok is usually more affordable than to other Asian destinations, he says. For example, using Kayak.com, we found mid-April flights between Los Angeles and the Thai capital for $761 round-trip. And Bangkok offers a good base from which to hopscotch through the region aboard budget airlines.

The same strategy applies when you’re traveling in Europe. For instance, Hamburg is an affordable hub from which you can fly inexpensively to other cities. Dublin, home of Ryan-air, also works well as a European hub. But watch out for extra fees that are even more outrageous than what you may be charged at home. For example, says Leffel, instead of charging a single fee for an overweight bag, some airlines impose a fee for each kilo (2.2 pounds) over the limit.

For help finding a budget airline, go to www.whichbudget.com. Select your overseas starting point, end point or both, and the site will list airlines you’ve probably never heard of that service each route. For example, if you search for flights from Bangkok to other Asian destinations, you’ll get options on AirAsia, Jetstar and Nok Air. Click on an airline’s link and you will be redirected to its home page to book a flight. “It takes more homework,” says Leffel, “but it costs a whole lot less than flying on a major carrier directly to where you’re going.”

Frequent-Flier Programs

What’s Changed. Loyalty has never been less rewarding. Airlines are modifying their programs to require many more miles in trade for a ticket. Plus, many programs charge extra fees for issuing or changing tickets, or for booking -- then canceling -- a flight. And using your miles for an upgrade could mean some crazy fees -- up to a whopping $1,000 for the cushy seats on international flights on Continental and United airlines, for example.

Best Deals. Southwest’s Rapid Rewards program currently offers a simple system: Fly eight round-trips within two years and you get a free round-trip ticket -- with just one possible extra fee ($50 to reactivate expired miles). The program is slated for a makeover in mid 2010, and details of Rapid Rewards 2.0 are as yet unknown. Bob Jones, travel expert with BookingWiz.com, touts Alaska Airlines’ program, even if you never plan to set foot on an Alaska Airlines plane. The program allows you to earn elite status, which lands you ad-vantages such as bonus miles and preferred seating, by flying any of more than a dozen air carriers that partner with Alaska, including American and Delta, which are members of the OneWorld and SkyTeam global alliances, respectively. And you can redeem your miles for flights on any of those partners.

What to Skip. Leaving your accounts inactive. An estimated ten trillion unused miles are currently in circulation, worth about $165 billion in tickets. A good portion of those will expire unused because airlines often close inactive accounts with little warning. You can keep your accounts active by earning and redeeming miles in several ways: flying on the appropriate airlines, using your rewards credit card or shopping at participating retailers.

Last-Minute Travel

What’s Changed. We had become accustomed to holding out for the big 11th-hour sales airlines would often offer to fill flights. But because many airlines are eliminating less-profitable flights, fewer tickets are available for discounts.

Best Deals. Airlines are keeping their best last-minute fares from the aggregators and online travel agencies and offering them on their own sites. Get those bargains by signing up for airlines’ free rewards programs to receive e-mails with promotional codes and special offers. JetBlue, for example, e-mailed subscribers about a one-day sale on November 30 offering one-way fares as low as $39 for trips taken in December.

What to Skip. LastMinute.com. Over the past year, as airlines have increasingly highlighted last-minute deals on their own sites, LastMinute.com has often come up empty. Time and again we’ve tried booking an advertised rate on the site, only to be told that the fare is no longer available (at which point a higher fare would be offered).