Friday, October 31, 2014

Airlines try to boost fares

October has been the busiest month this year for attempted airfare hikes among major airlines, despite Ebola fears and low jet fuel prices.

The latest attempt, by American Airlines-US Airways, was relatively small — up to $4 per round trip — but it covered the bulk of American's route system, according to Rick Seaney of

Within days, the fare hike had failed when too few of its competitors followed and the newly merged airline rolled back its prices, Seaney reported.

In the hypercompetitive airline business, fares typically increase when one carrier raises prices and others follow. If competitors don't follow, the initiator usually drops back its fares.

The attempt was the 21st this year and the fourth in October alone. Five have succeeded this year.

Seaney noted that fare-hike attempts suggest that Ebola fears are not hurting demand for flights, and airline executives last week said as much during their quarterly earnings conference calls.

It also means savings from lower jet fuel prices, which boosted airline profits, are not being passed along to consumers, he said.

Other fare-hike attempts included a $10 increase per round trip on Oct. 9 initiated by JetBlue Airways. It was matched by other major airlines but then rolled back, with only JetBlue sticking with the increase. After another attempt Oct. 14 by United Airlines and Air Canada ended in failure, a Delta Air Lines hike of $4 on Oct. 16 succeeded, according to FareCompare.

The average domestic airfare is $396, up 2.5 percent after inflation compared with last year, according to second-quarter data from the U.S. Department of Transportation.

Since 1995, inflation-adjusted fares declined 14.7 percent compared with a 56.3 percent increase in overall consumer prices, the Transportation Department said.

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