A big airfare hike, with more expected

Where is this going to end? The three biggest airlines have increased domestic fares by as much as $60 round-trip to offset rocketing fuel costs.
Earlier this month, many airlines kicked up fuel surcharges by $20 on many domestic routes, putting this year's tote board figure at as much as $130 for a round trip.
All of this comes days after American announced that it would start charging $15 to check even one piece of luggage. Most of the major carriers already charge $25 for a second bag, and a number of them refused to rule out the possibility that they would eventually follow American's lead.
And this was not just the beginning of the fare increases and multiplying menu of fees.
Again, where does it all end?
To begin with it's clear that the airlines aren't exaggerating about fuel costs. The Wall Street Journal's Scott McCartney looked at it this week in his column, The Middle Seat. The increase in oil prices from a year ago translates into $24.6 million in additional fuel costs for passenger and cargo airlines over the course of a year. To put it into perspective, this is an industry that in its best year, 1999, only made $5.3 billion.
"Right now,'' Rick Seaney, CEO of farecompare.com, told me, "these increases aren't really helping these guys that much. They're basically flying full planes and they still aren't making money.''
Most analysts agree that the solution involves basic economics. If oil prices remain at current levels, the big, older airlines will need to keep cutting costs -- trimming staff and paying those who stay on less, and more importantly, axing unprofitable routes -- and keep raising fares and fees.
Yes, they will lose customers.
But this will end only when they are flying planes full of customers whose ticket prices are high enough to make the flights profitable.
And with oil at $130 a barrel we don't seem to be close to that point.
Perhaps the smartest thing the carriers could do right now would be to stop nickel and diming this thing and just raise prices $100-$150 a seat.
The bottom line going forward is that most of us will fly much less frequently. And as the airlines cut routes, more and more small and medium-sized cities will have little or no service.
This is where we seem to be heading, and there really doesn't seem to be any way out.