Airfare increases likely to stick
The airlines are at it again, imposing the first fare increase of the new year and the third within a month.
The increase on many domestic routes ranges from $4 to $10 per roundtrip ticket, depending on the length of the flight.
Southwest Airlines, which boasts about low fares, appears to be the prime mover behind the latest price hike.
After some airlines made modest increases on flights to and from cities in the Midwest last week, Southwest jumped in and raised prices across most of its routes, according to Rick Seaney, the CEO of website FareCompare.com.
Southwest spokesman Brad Hawkins said the increases will help offset higher fuel and operating costs.
Over the weekend, the Southwest increases were matched by other major airlines including American, Delta, United, Continental, US Airways and Frontier, making the price hikes likely to stick, Seaney said. American and US Airways confirmed matching Southwest's increase, while others did not immediately comment.
The increase mostly covers the usually slow travel period in January and February, since most passengers book flights within 30 days of their trip. And it comes as the airlines are grappling with higher prices for jet fuel.
The airlines have more leverage to raise prices because they've cut flights and grounded planes in the last couple years. Travel demand was battered during the recession but has been recovering modestly in recent months. But with airlines controlling the supply of seats, even the modest pickup in traffic has led to fuller planes -- and the opening for airlines to boost prices.
Southwest raised prices $2 each way on trips up to 500 miles, $3 for 501 to 1,000 miles, and $5 each way on longer flights.
Seaney said he thinks the latest fare hike has more to do with the restricted supply of airline seats than with fuel prices.
U.S. airlines lost billions in 2008 and 2009 but turned profitable last year and are expected to make more money in 2011. They have boosted revenue by charging more for flights on peak travel days and imposing fees for checking bags, changing flights, and other services.