Monday, August 20, 2012

Southwest raises fares; other airlines follow

Airfares look to be going up for the fifth time this year. 

Southwest Airlines led the latest attempt by U.S. airlines to raise fares, with a $5 increase on one-way routes of less than 500 miles.

Usually, when Southwest raises fares, other U.S. carriers match, and the increase lasts.

So far, some of the largest legacy carriers — Delta, US Airways, United and American — have followed Southwest's lead. Virgin America also raised fares on short-haul markets where it competes with Southwest, including San Francisco to San Diego, Las Vegas and Los Angeles.

Airlines have had a profitable year so far but still complain of higher operating expenses, primarily jet fuel costs. They've been able to keep fares up by cutting back on the number of flights and making fewer seats available.

"We never want to increase fares for customers, and are proud of the low fares we offer on," says Ashley Dillon, a spokeswoman for Southwest. "Sometimes, though, an increase is necessary to cover the cost of our business, including fuel."

Airlines have tried to raise fares eight times so far this year. Four have been successful. This latest Southwest-led move would bring the tally to five.

Southwest's average passenger airfare is $141.72 one-way, and the average passenger trip length is about 939 miles.

Last year, airlines made 22 attempts to increase fares. Nine were successful.

Airlines are changing their strategy this year, says Rick Seaney, CEO of

Typically, carriers increase fares on a wider range of routes. But last week, Delta tried to raise prices on fares more common among business travelers, those tickets bought at the last-minute for higher-price seats with more leg room. That attempt failed when other airlines didn't match.

"It is pretty clear that domestic airlines would like to hike domestic prices … but seem skittish about continued broadbased hikes and are switching, at least temporarily, to plan B — targeting specific segments of the flying public," Seaney says.

Seaney expects this latest fare jump to stick.

"It is rare for any type of hike where Southwest participates to fail," he says. "Rather, the opposite is normally the case, as many hikes fail due to their lack of participation."


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