LATEST – 6th airfare hike of the year fails. At 4 p.m. eastern on March 4, American and Delta rolled back their fares, as United did just a few hours earlier. [See chart below]
UPDATE March 4 – At 1 p.m. eastern, United Airlines began rolling back its fares – just 24 hours after raising them.
UPDATE March 3 – At 1 p.m. eastern, United matched the fare hike. So far, the fare is looking like it’ll stick. We will add additional details as we see movement from other airlines.
UPDATE March 3 – At 10 a.m. eastern, Delta Air Lines matched American’s price hikes.
UPDATE March 2 – At 4 p.m. eastern today, American Airlines launched the sixth airfare hike attempt of 2016, raising fares on a significant portion of its domestic route system plus higher prices on some of its flights to Mexico and the Caribbean. [See chart below]
6th Airfare Hike of 2016
According to an analysis of FareCompare’s real-time airfare data, the sixth airfare hike attempt of the year began with American filing more than 460,000 increases on short, medium and long-hauls domestic routes. Most were small increases of $3 each-way but the Mexico/Caribbean hikes also included some increases from $7-$10 each-way.
As I’ve noted before, airlines are always probing to see if passengers will be receptive to higher ticket prices so the carrier can lift base fares. This attempt failed.
Earlier Airfare Hike Attempts – Timeline
Feb. 23: Fifth hike attempt initiated by Southwest is successful. The five airfare hike attempts in the first six weeks of 2016 cumulatively raised fares by $22 round-trip. Note that there were only five for all of 2015.
LISTEN: Why should we care? Rick explains.
How 4th and 5th Hikes Played Out
The 4th hike of 2016 was quickly followed by a 5th attempt. Here’s the timeline so far.
Fourth Airfare Hike Attempt
- Feb. 17, 8 p.m. – Delta raises fares $3 each-way
- Feb. 18, 8 p.m. – Delta rolls back the hike
This attempted price hike gained no traction and quickly faded away.
Fifth Airfare Hike Attempt
- Feb. 19, 4 p.m. – Southwest hikes fares $5 each-way.
- Feb. 19, 8 p.m. – United, American and Delta match the hike.
- Feb. 22, 10 a.m. – No significant filings.
What the Hikes Mean and Who Will Pay
Who will pay: Most of the increased airfare will be borne by business travelers, those who procrastinate on shopping for airfare, people who live in smaller cities and/or less competitive markets.
The good news: Hikes were not detected on hotly-contested routes nor on some sale fares which typically target midweek flights.
Why are airlines raising fares: Airline investors expect carriers to squeeze as many nickels per square millimeter on aircraft as possible. At the moment, it appears the economic winds (plus steady demand for travel) are keeping those sails inflated, at least domestically.