Fare Hikes Are Sticking
- Thread starter MiAAmi
- Start date
- Thread Starter
- Thread starter
- #2
WingNaPrayer
Veteran
DALLAS -- Continental Airlines Inc. (CAL), citing the need to stay competitive, rescinded the $10 round-trip domestic-fare increase it led late last week. At the same time, discount carrier JetBlue Airways Corp. (JBLU) raised the majority of its fares, increasing seven-day advance-purchase tickets by $5 for one-way travel.
Continental reversed course early Monday after certain competitors that had followed its fare boost rolled back their increases on all or some routes.
"We need to remain competitive," said a spokeswoman for the Houston-based carrier.
Continental's failed attempt to raise U.S. ticket prices comes on the heels of two successful industry fare boosts in a month at big traditional airlines. In the last two weeks, Northwest Airlines Corp. (NWAC) twice raised its domestic- leisure fares by $10 to $20 round-trip, depending on the distance. Key competitors followed and the increases succeeded. Even Southwest Airlines Co. ( LUV), a discount carrier, raised most of its fares between $2 and $6 round trip on March 11, though it said the increase was not in reaction to the Northwest- led fare boosts made at the time.
Airlines have badly needed to boost fares to help offset rising fuel costs, which have risen sharply as oil prices have climbed to above $55 a barrel. But an oversupply of seats in the industry has made it difficult to pass along higher costs to passengers. When an airline does try to pass along those costs, it's a futile attempt if key competitors don't follow. That's because the airline with the higher prices can see its bookings fall off dramatically within hours, costing it millions of dollars, airline-pricing executives say.
In this latest attempt to raise fares, Continental led the increase late last week and big traditional airlines generally followed Friday or over the weekend, including Delta Air Lines (DAL), Northwest, America West Holdings Corp. (AWA), UAL Corp.'s (UALAQ) United, US Airways Group Inc. (UAIRQ) and AMR Corp.'s (AMR) American Airlines. Then Sunday, Northwest withdrew its increase on routes where it competes with discount airlines. Continental Monday morning did the same to stay competitive with Northwest but at the same time, Delta was apparently reversing course more dramatically. Continental, following Delta, later Monday completely pulled back on its increases. Still, as of late Monday afternoon, Northwest had its higher prices in place on many routes, leaving open the possibility of competitors reviving their increases.
Continental reversed course early Monday after certain competitors that had followed its fare boost rolled back their increases on all or some routes.
"We need to remain competitive," said a spokeswoman for the Houston-based carrier.
Continental's failed attempt to raise U.S. ticket prices comes on the heels of two successful industry fare boosts in a month at big traditional airlines. In the last two weeks, Northwest Airlines Corp. (NWAC) twice raised its domestic- leisure fares by $10 to $20 round-trip, depending on the distance. Key competitors followed and the increases succeeded. Even Southwest Airlines Co. ( LUV), a discount carrier, raised most of its fares between $2 and $6 round trip on March 11, though it said the increase was not in reaction to the Northwest- led fare boosts made at the time.
Airlines have badly needed to boost fares to help offset rising fuel costs, which have risen sharply as oil prices have climbed to above $55 a barrel. But an oversupply of seats in the industry has made it difficult to pass along higher costs to passengers. When an airline does try to pass along those costs, it's a futile attempt if key competitors don't follow. That's because the airline with the higher prices can see its bookings fall off dramatically within hours, costing it millions of dollars, airline-pricing executives say.
In this latest attempt to raise fares, Continental led the increase late last week and big traditional airlines generally followed Friday or over the weekend, including Delta Air Lines (DAL), Northwest, America West Holdings Corp. (AWA), UAL Corp.'s (UALAQ) United, US Airways Group Inc. (UAIRQ) and AMR Corp.'s (AMR) American Airlines. Then Sunday, Northwest withdrew its increase on routes where it competes with discount airlines. Continental Monday morning did the same to stay competitive with Northwest but at the same time, Delta was apparently reversing course more dramatically. Continental, following Delta, later Monday completely pulled back on its increases. Still, as of late Monday afternoon, Northwest had its higher prices in place on many routes, leaving open the possibility of competitors reviving their increases.
