Thursday, June 25, 2009

Fare Fandango

Thought it might be nice to work an Argentinian allusion into the headline, in honor of, you know.

However, the dance going on in the airline industry is actually a form of musical chairs.

The big plan in the airline industry is to get capacity down below demand and then raise prices, except they have to be careful not to be seen actually colluding on this because 1. Someone could summon the anti-trust cops, assuming there still are any and 2. There's always an airline that decides not to play along and instead lunge for market share while the others try to collectively boost prices.

That said, domestic airlines are now busily putting into effect the second across the board base fare hike in as many weeks, according to the ever-vigilant Rick Seaney at

The fare fandango started yesterday when American raised prices between $10 and $20 roundtrip on "a significant number of U.S. routes," Seaney said. United "began to significantly match" American -- while at the same time sharply discounted fare sale -- yes, sale -- of $250 to $275 roundtrip to Honolulu from Dallas, Houston, Newark, Atlanta, Minneapolis and Salt Lake City. Hawaii air-travel capacity has been sharply reduced across the board in the last year or so, it should be noted. You want an amazing hotel deal? Hawaii has 'em. Now United is offering amazing fares.

Anyway, back to the fare hikes, today Delta (including Northwest) "significantly matched" yesterday's fare increases at American and United, and Continental is also adding similar fare increases on some routes, and Seaney expects Continental to catch up to the others today.

"US Airways is the only remaining legacy airline that has yet to significantly match," Seaney said. "I would expect them to do so by the end of the day."

All year, airlines have been trying to juice up plummeting demand with spot fare-sales, but those days are waning. "The pace of airfare sales has dried up recently," Seaney said.

Except that crafty AirTran has gone and launched a whole bunch of fare sales offering "new market lows on hundreds of city pairs," said Seaney.


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