Wednesday, February 02, 2011

Airlines Hike Fares, Weigh Reviving Fuel Surcharges

Airlines are busily hiking fares again, even as they have canceled well over 13,000 flights during the awful snow and ice storms of the last few days.

Rick Seaney, the CEO of reports "significant fare and fuel-surcharge hike activity from several domestic U.S. airlines."

He adds, "Coinciding with Brent crude prices hitting a two-year high of $100/barrel, late [Monday] evening, American Airlines initiated an airfare hike between $4 and $10 roundtrip on the bulk of their domestic route system, while in the same filing United/Continental cautiously added a $6 roundtrip fuel surcharge on a significant number of routes, being careful to tiptoe around low cost airlines and the cheapest of sale fares.

"This is the third airfare hike attempt this year (two in December 2010). The four previous domestic hikes the past two months all met with varying degrees of success."

[UPDATE: Seaney says this afternoon: "In a flurry of activity the past 18 hours several airlines have matched the American-initiated domestic airfare hike of $4 to $10 roundtrip -- including Continental, Delta, United, US Airways, JetBlue, Alaska, AirTran, Air Canada and WestJet leaving only Southwest and Frontier sitting on the sidelines. United/Continental as part of their matching of the American hike dropped the $6rt fuel surcharge in what appears to be related to domestic airlines motto of "never be $1 more or less than your competitor unless you have a scheduling advantage" fostered by consumers behavior to comparison shop."]

"Outside of peak travel 'miscellaneous' surcharges (charges for specific high volume travel periods), we haven’t seen domestic fuel surcharges since November 2008 when U.S. airlines dropped them from domestic airfares as fuel prices plummeted from summer highs of $140+/barrel that year.

"Additionally, JetBlue added a fuel surcharge to Puerto Rico and the Caribbean between $70 and $90 roundtrip, while American also increased prices to Canada by $22 roundtrip (matched by Air Canada) and Hawaii by $21 roundtrip.

"During the day [Tuesday], both US Airways and Alaska Airlines (on Canadian routes) began matching American's hike with Delta matching a smattering of the fuel surcharge increases. Staying out of the fray for the moment are Southwest, AirTran and Frontier."

Separately, a report today from the Transportation Department's Bureau of Transportation Statistics says that average domestic air fares rose to $340 in the third quarter of 2010, up 10.7 percent from the average fare of $307 in the third quarter of 2009.

The hilariously named Newark Liberty International Airport had the highest average fare, $469, while Atlantic City, N.J., had the lowest, $153, according to the BTS report.

Third-quarter fares decreased 0.3 percent from the second quarter, after four consecutive quarterly increases. During those four quarters ending in the second quarter of 2010, fares increased 12.9 percent after falling to a recent low of $302 in the second quarter of 2009.


1 comment:

ChefNick said...

This strikes utter fear into my heart. I have been paying up to $10,000 a year to go to Japan from Montreal exactly TWICE a year to pick up my young son and fly him to Montreal on his school vacation, which totals about seven weeks per year. Not only that, but the routes are becoming more and more Byzantine: used to be Montreal>Vancouver>Osaka but now only a couple of carriers fly direct from N. America to Osaka. So it becomes YUL>ORD>SEA>KIX, extending everything by about seven hours.

For a while I had to go through Tokyo, which I must say is the scariest airport I've ever landed at (once we came in during a typhoon).

So it looks like my wallet is just about to get a whole lot lighter, and I don't have to even fly until July, but I'd better get with it in January.

My question is, how much did people pay in today's dollars, for say, an economy flight to Japan from N. America, say, in the early 70s? I wonder if it was comparable.

But I sure wish Freddie Laker were around today.