Major Airlines Announce Rate Hikes for Last-Minute Tickets
By Jeremy W. Peters
THE NEW YORK TIMES
Add this to the growing list of headaches for travelers: Fares keep rising.
Most of the nation’s largest airlines said Thursday they would raise prices for many last-minute tickets.
If the fare hike holds, it will be further evidence that the airlines are taking advantage of a situation that is good for them and bad for consumers — demand for travel is growing with the economy, yet the number of seats remains limited, giving the airlines power to push up fares.
On Thursday, American Airlines, United Airlines, Northwest Airlines, Continental Airlines and US Airways followed Delta Air Lines’ move to increase one-way walk-up fares, which are typically bought by business travelers, by $50.
Airlines generally raise fares in smaller increments. So even if some airlines break from the pack and pull back somewhat from the increase, fares on many routes could end up higher, extending a run of rising ticket prices.
“Because of demand they don’t have to offer seats for $50 when they can sell them for $150,” said Mike Boyd, president of the Boyd Group, an aviation consulting firm. “Since we have a strong economy and increased pressure on airlines in terms of the seats they have, they can start to raise fares.”
This latest increase will affect some of the most expensive flights, which have already jumped 21 percent in the last year, according to Harrell Associates, an airline data-tracking firm. With the $50 increase, the average last-minute one-way ticket, which last week cost $478, will likely jump another $38.
Investors reacted to the news by bidding airline stocks higher. Shares of AMR, parent company of American Airlines, rose $1.43, or 6.5 percent, to $23.31. Shares of United rose $2.61, or 9.4 percent to $30.42 a share. US Airways stock climbed $2.99, or 7 percent, to $45.48 a share.
Business travel accounts for roughly a quarter of the seats sold by the nation’s airlines but nearly half their revenue. The $50 price increase should add to the industry’s bottom line this summer, which is expected to be most profitable for the industry since 2000.
A record 207 million people will fly this summer on flights that will be fuller than anytime in the last 60 years.
So far, travelers generally have not balked at the rising fares.