If they haven’t already, many people are beginning to plan their vacation trips for 2011. A major concern for what destinations fall within your budget is often the airfare. Well people should be prepared for a shock this year and may want to re-consider the recently popular “stay-cation.”

Airlines are trying to keep up with the continuously rising oil prices and have already increased their prices four times since the start of 2011. This is very worrisome when you consider that in all of 2010 they increased their prices only three times.

According to the Bureau of Transportation Statistics, prices this year are getting close to their highest levels – which they reached in 2008. The price of jet fuel has increased 58% since last summer to $2.99 a gallon. Oil prices also increased more than $12 a barrel last week putting it over $98 a barrel. With these price increases, fuel now accounts for about 40% of airlines’ costs – which is up from about 30% last year. This is partly due to the violent conflicts occurring in Libya, which is a major oil producing country. If things continue to worsen there we may see continuous substantial increases.

The rise in fuel costs will have a direct effect on airlines’ profits – especially considering the top airlines posted a skimpy profit margin of just 3.3% in 2010. These increases could dramatically hurt the already ailing airline industry and could lead to further surcharges and fees.

These increases may change the way Americans view air travel overall and we will most likely see a greater push toward more easily accessible vacation destinations this summer. I shudder at the day when the Jersey shore becomes the biggest vacation bang for your buck. Yet another reason, among many, that I hope the conflict in Libya and the Middle East comes to a quick and peaceful resolution.
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Nick Haneiko

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