First Airfare Hike Attempt Since April
As of late last night, all the legacy airlines and the major low cost airlines rescinded the $10 roundtrip airfare hike. Alaska and Frontier remain the lone holdouts but are likely to rollback later today to stay competitive.
American Airlines rolled back its match of the system-wide domestic airfare hike initiated by United/Continental Friday morning that was widely matched over weekend by other U.S. carriers. It appears Southwest waffling over the weekend (initially matching then rolling back) is likely to scuttle this price increase attempt.
The 13th domestic airfare hike of 2011 was widely matched over the weekend by all legacy airlines (American, Delta, US Airways) as well as by smaller carriers (Alaska, Frontier, JetBlue, Virgin America). While Southwest/AirTran began matching Friday evening, it rolled back prices by Sunday afternoon.
This morning (7-15-11), United/Continental launched the first attempt at a domestic airfare hike since late April. The airline increased prices by $4 to $10 roundtrip (loosely based on trip distance). This is the 13th attempted domestic airfare hike of 2011; seven of the previous attempts were widely successful.
FareCompare CEO Rick Seaney shed more light on airfare hikes as he chatted with editor Anne McDermott; take a listen.
The torrid pace of airfare increase attempts began in late 2010 and continued through the first four months of 2011; however, domestic airlines took their foot off the hike accelerator in late April and settled in for the historically busy and lucrative summer traveling season.
This spring saw many consumers fretting over airfare prices, with suggestions that flying could soon be the province of only “the rich”, since oil at $100+ a barrel appeared to be the new norm.
Fortunately for the domestic air traveling public, the new airline economy ushered in by high oil prices in late 2007 requires domestic airlines to fill every middle seat with price-sensitive folks, effectively limiting an unchecked rise in ticket prices.
I suspect United is probing the competition’s appetite for a lift in ticket prices, especially since airlines have some recent booking-demand trend information after launching a couple of fall sales over the past few weeks.
Domestic airlines still have to operate within a competitive equilibrium of never being a dollar more or less than their competition (except when they have a convenience advantage) simply because carriers that are “a dollar more” end up on page 15 of popular comparison shopping sites.