Another Fare Hike

I’m glad Rick Seaney at FareCompare.com is keeping such close track on these interminable air-fare hikes. When I go to book a ticket these days, that $350 fare I was expecting suddenly has turned into a $600 fare, such as one I just booked to Atlanta. Here’s the latest report from Rick, who has been doing a tremendous job keeping track of these fares:

***

By Rick Seaney

United Airlines 4^th Airfare Increase in a Row – Up to $50 Roundtrip!

Friday, March 14, 2008 9:15am CDT

Last night in the 8:00pm EDT U.S. domestic airfare distribution United Airlines raised airline ticket prices between $4 and $50 roundtrip for the bulk of its route system.

This attempted airfare hike is the 4th consecutive weekly increase and marks the 8th attempted increase in 2008 – five of the previous seven attempted increases in 2008 where “successful”.

This increase attempt breaks the pattern this year’s numerous $10 “every week or so” increase attempts — by increasing airfares up to $50 roundtrip for the longest distance routes and providing 6 different price increase levels based loosely on distance.

This United increase is “loosely” based on route distance (with several notable exceptions) and is laddered as follows (leisure, 14 days advance purchase or more, business, less than 14 days advance purchase):

• $4 roundtrip increase – 300 leisure city pairs, 700 business city pairs
• $8 roundtrip increase – 1,500 leisure city pairs, 3,800 business city pairs
• $10,$11,$12 roundtrip increase – 3,900 leisure city pairs, 5,800 business city pairs
• $20 roundtrip increase – 200 leisure city pairs, 180 business city pairs
• $30 roundtrip increase – 5,000 leisure city pairs, 6,200 business city pairs
• $50,$52 roundtrip increase – 2,500 leisure city pairs, 3,800 business city pairs

The total city pairs with an increase are approximately 20,000.

United has thrown down the gauntlet for this particular increase – a change of this magnitude across such a wide range cities, with different increase amounts ostensibly based on market competition (or lack thereof) and distance is a massive undertaking. Legacy airline matching may take some time as they try to absorb the intricacies of this complex airfare hike.

A quick check of the United Airlines hub city Denver shows this laddered increase on dozens of city pairs, even on overlapping Southwest Airline markets.

I have been closely following airfares for almost 5 years and this past 6 months (culminating with this latest increase) have been so volatile on the increase side that I don’t have any historical information to compare it against – I have been predicting air travel consumers are in for a wild ride on airline ticket prices this year and I think we just reached the top of the highest point on this rollercoaster…

Case in point, in the midst of the increase there is a sale in place started by Southwest which is getting selective matching, so those that are very flexible can still grab some of the cheapest air travel deals we have had in the past year.

Other notable increases occurred on U.S./Canadian markets of $22 roundtrip by several legacy and smaller airlines (initiated by Air Canada).”

***

Here here is the way it's seen today in a report by Tom Parsons, the CEO of BestFares.com:

"United And Continental Airlines Attempt To Raise Airfares Up To $50 Roundtrip

Arlington, TX -- March 14, 2008 - On the evening of March 13, 2008, United Airlines raised both their leisure and business airfares by $30 roundtrip on flights up to 1,500 airmiles and a whopping $50 roundtrip on domestic flights over 1,500 airmiles. Continental Airlines matched this increase today.

"If this airfare hike sticks, it will be up to 250% higher than any other fuel surcharge or airfare increase we have seen since December 18, 2007," says Tom Parsons, CEO and founder of Bestfares.com, an interline website that tracks airfare changes and travel industry trends. "We have seen United raise airfares once this year for $30 roundtrip, but that attempt was rolled back," adds Parsons.

It should also be noted that since December 18, 2007, the major airlines had already successfully raised both leisure and business airfares by $70 roundtrip by either raising airfares or fuel surcharges. If this increase is matched by American, Delta, Northwest and US Airways, travelers flying over 1,500 airmiles on non-competitive routes will be paying as much as $120 roundtrip more on the same routes in less than three short months.

Listed below are the airfare hikes and fuel surcharge increases the major airlines have made since December 18, 2007.

(1) Week of December 20, 2007: Major airlines raise fuel surcharges on leisure and Business Class fares from $10 roundtrip to $20 roundtrip. Total increase since December 18, 2007, $10 roundtrip.

(2) Week of January 7, 2008: Major airlines raise leisure and Business Class airfares by $10 roundtrip. Fuel surcharges still remain at $20 roundtrip. Total increase since December 18, 2007, $20 roundtrip.

(3) Weekend of January 24, 2008: Major airlines double fuel surcharges on leisure and Business Class airfares from $20 to $40 roundtrip. Total increase since December 18, 2007, $40 roundtrip.

(4) Weekend of February 22, 2008: Major airlines raise airfares on both leisure and Business Class airfares $10 roundtrip. $40 fuel surcharge still in place. Total increase since December 18, 2007, $50 roundtrip.

(5) Weekend of February 29, 2008: Major airlines raise leisure and Business Class airfares $10 roundtrip. Total increase since December 18, 2007, $60 roundtrip.

(6) Weekend of March 7, 2008: Major airlines raise fuel surcharges from $40 to $50 roundtrip. Total airfare increase with airfare hikes and fuel surcharges since December 18, 2007, $70 roundtrip.

Please note that this hike might not stick unless matched by AA, Delta, Northwest and U.S. Airways.
(7) March 14, 2008: United & Continental Airlines raise airfares by $30 - $50 roundtrip. Total airfare increase with airfare hikes and fuel surcharges since December 18, 2007, $100 for flights up to 1500 miles, $120 for flights over 1,500 miles.

"Now that the price of crude oil has gone as high as $111 per barrel this week, we do expect the airlines to pass this higher fuel cost on to the traveling public," states Parsons. "If there is any fact here, air travelers will be paying much more than they did last summer, especially in markets where the legacy airlines do not have to compete with low-cost carriers such as Southwest Airlines, JetBlue, Spirit, Virgin America and Frontier."

As fuel prices continue to rise, non-competitive markets will continue to take the brunt of future airfare and fuel surcharge hikes. The biggest opportunities for low-cost travel are to those travelers who have the option of flying on low cost carriers, or on those routes where the legacy carriers have to match those fares to remain competitive. Those travelers still have the "Freedom To Fly" for less, for example, coast to coast for as little as $198 roundtrip.

"For those who are planning travel for the upcoming busy summer travel season, the airlines are going to have to keep addressing the reality of higher and higher fuel prices and the general public is going to have to face the fact that they are going to have to spend more if they want to continue to travel by air. If you thought you'd be able to travel this year for less than, or even the same price, as last year, well you better get rid of those thoughts because they're not based in reality," adds Parsons . (" )

###