Thursday, April 24, 2008

United Initiates New Fare Hike

Here we go again.

From Rick Seaney, the CEO of (and please note his advice about locking in fares for summer travel now, if you possibly can):

Rick writes:

"At noon today United Airlines initiated the thirteenth attempted domestic airfare hike of 2008 – eight of the previous twelve had been widely successful.

United raised airfares across the bulk of its domestic route system in a laddered fashion from $4-$60 round-trip for leisure travelers in over 5,500 city pairs and $4-$70 for business travelers in over 9,000 city pairs.

A quick check of city pair with increases shows that the laddered hike does not closely follow flight distance as many city pairs less than 500 miles apart have a $20 or more increase round-trip. Our software shows over 20 different price increase levels in the $4-$70 range – the most we have recorded for a laddered increase which almost always has only a few price levels.

United by far has been the most active instigator of airfare increases in 2008, initiating 8 of the 13 airfare increase attempts this year – making one wonder how they racked up such a huge loss in the first quarter – certainly it wasn’t for lack of trying to increase airfares.

I found it a bit ironic the other day when the CEO of Delta “called” for airlines to raise airfares across the board by 15 to 20 percent to offset fuel costs – in days gone by there had been much ado about signaling between the “back rooms” of airlines on price hikes – now this “signaling” is apparently done via press release…

To fulfill the wishes of the Delta CEO, he needs a lot of cooperation from the other legacy airlines which means we may be in for several more active weeks of increases including the one today by United Airlines.

Unfortunately for air travel consumers this 13th increase of 2008 puts us on pace for just under 40 increase attempts this year compared to a total 23 increase attempts (17 widely successful) in 2007 ( by far the most in 3 years prior to 2007)..

I have updated our 2008 airfare hike timeline as follows:

1.---January 3rd, initiated by United, $10 roundtrip, successful (sticky)

2. ---January 11th, initiated by United, $30 roundtrip, unsuccessful

3. ---January 17th, initiated by American, $20 roundtrip, unsuccessful

4. 4. January 24th, initiated by Continental, $20 roundtrip, successful (sticky)

5. ---February 22nd, initiated by United, $10 roundtrip, successful (sticky)

6. ---February 28th, initiated by Delta, $10 roundtrip, successful (sticky)

7. ---March 7th, initiated by United, $10 roundtrip, successful (sticky)

8. ---March 14th, initiated by United, $4-$50 roundtrip, successful (sticky)

9. ---March 19th, initiated by Delta, $10 roundtrip, unsuccessful

10.---March 27th, initiated by Delta, $10 roundtrip, unsuccessful

11--- April 9th, initiated by United, $4-$30 roundtrip, successful (sticky)

12.---April 15th, initiated by United, $10-$20 roundtrip, successful (sticky)

13.---April 24th, initiated by United, $4-$70, pending

United has had the most success in getting other legacy airlines to come along with increases when it has laddered the increases, instead of trying to instigate an across the board $10 or $20 hike – I would suspect we will quickly see some matching by the end of the day tomorrow from other legacy airlines.

I again cannot stress enough that consumers should lock in their summer airline travel as quickly as possible, seats are going to start to get scarce and the prices are going to reflect the summer supply and demand.

I will update on any major matching or rollback activity as it occurs." (Rick Seaney)


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