Thursday, March 10, 2011

Another Fare Hike Coming Our Way

Late last night American Airlines initiated what looks like the start of the seventh successive fare-hike of the year when it filed a $10 increase on roundtrip domestic airfares, according to Rick Seaney of

"Eerily, 2011 is tracking in lockstep with the first nine weeks in 2008," he said, pointing out:
* 9-Mar-2008 - Oil $105/barrel, Today $104/barrel
* 7-Mar-2008 - 7 domestic airfare hike attempts (5 successful), Today 7 domestic airfare hike attempts (previous 6 successful)

"If history repeats itself we should see weekly hike attempts of at least $10 roundtrip through the end of April as we did in 2008 where oil closed at $115/barrel that month," he said, adding:

"I expect legacy airlines to continue probing weekly, matching as a tightknit group (save US Airways' rare resistance) as they watch intently for their low-cost brethren to hop on board. When/if they don’t join, legacies have no choice but to roll back or tiptoe around those routes to maintain competitive equilibrium.

"Taking into account summer travel surcharges, our internal index of average cheapest domestic roundtrip prices between the top 50 U.S. cities is nearly at the same levels we saw peak in June of 2008.

"The $10,000,000 question is when will consumers begin to push back, if at all?"


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