Friday, July 17, 2009

Delta Initiates a New Round of $10 Fare Hikes. Will The Rest Follow?

This is starting to sound like a souk. While tossing up weak fare sales here and there, airlines are also trying to hike prices. Come on, there gotta be some buyers out there!

Last night Delta Air Lines (including Northwest) initiated a domestic airfare hike of $10 roundtrip ($5 each way) across the bulk of its U.S. route system, according to Rick Seaney of

"This domestic airfare hike marks the third attempt in the past six weeks, with the past two tries successfully sticking," said Seaney, who noted that on yesterday's second-quarter earnings call American Airlines CEO Gerard Arpey said he did some quick calculations on the back of an envelope and figured the airline "needed about $17 more per one-way customer in the quarter to break even."

Seaney added, "If this domestic airfare increase sticks it would mean an increase of $20 to $25 each way domestically for the legacy airlines in the past 6 weeks. However, this increase does not include international tickets nor the widely matched off-peak late summer/fall airfare domestic sale initiated by Southwest earlier this week.

"Starting this past November through late May ... airfare prices had been in a free fall. In June, domestic airlines popped their chutes with a couple of airfare hikes -- the big question is whether or not there is a hole in the canopy as demand in tough economic times is impossible to predict."


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