Airlines Raising Fares Again
DALLAS (AP) -- Airfares at major U.S. airlines are climbing again, continuing a dizzying pace of nearly weekly increases on both penny-pinching vacationers and expense-account corporate fliers.
The airlines are raising fares to cover higher jet fuel prices, and the strategy seems to be working. US Airways said Thursday that if the trend toward higher revenue continues, it will be able to cover foreseeable increases in fuel costs.
Jet fuel prices are over $3 a gallon, the second-highest reading in March behind only 2008, when oil prices surged to record levels and U.S. airlines lost billions of dollars.
Delta Air Lines touched off the latest fare hike by adding up to $20 to the price of domestic round-trip flights for tickets bought on short notice. American Airlines choose a more modest increase of $10 per round trip but applied it to virtually all tickets for travel within the 48 contiguous states.
By midday Thursday, Delta, United, Continental and US Airways had all settled on matching American's $10 increase.
None of the low-cost airlines -- including Southwest, JetBlue and AirTran -- had raised prices, according to Rick Seaney, CEO of FareCompare.com. If they continue to hold out, he said, Delta and the other big airlines could be forced to scale back their increases on some routes. Low-cost airlines have blocked some previous fare hikes by refusing to match them.
Some analysts think if prices go any higher, leisure travelers -- and maybe some corporate fliers -- will just stay home. Hudson Securities analyst Daniel McKenzie said higher fares will force companies to burn through their travel budgets and freeze or reduce travel later this year.
Seaney doesn't share that view yet. "It is pretty clear that demand hasn't softened enough to prevent airlines from testing new highs for base domestic ticket prices," he said.
US Airways president Scott Kirby said Thursday that travel demand in February remained "exceptionally strong," allowing the company to generate enough revenue to offset higher fuel prices.
Traffic on Kirby's airline rose more than 4 percent and a key measure of revenue per mile rose 10 percent in February, compared with a year ago.
(Copyright 2011 by The Associated Press. All Rights Reserved.)
