Delta-Initiated Domestic Airfare Hike has Failed

UPDATE 3 – Monday, Dec. 16: The hike attempt has ended in failure. Initiator Delta – and all the airlines that followed its lead – have now rolled back their prices.

UPDATE 2 – Friday, Dec. 13: Moments ago, American Airlines began rolling back its matching of the Delta domestic hike after lack of participation by both Southwest and JetBlue. We have never seen a hike attempt (at least, not in the last six years) in which a legacy airline’s rollback – after initially matching – has not completely scuttled the attempt.

For now it appears that all four major U.S. carriers (American/US Airways, Delta, United and Southwest) will have to be in alignment to push through a hike. That said, I expect to see Delta and United rolling back shortly, so consumers who plan on shopping today should wait until later this evening to get the benefit of the rollback.

UPDATE 1 – Wednesday, Dec. 11: Last night at 8 p.m. EST, the new American Airlines (with US Airways) began matching the Delta-initiated domestic hike of $4 to $10 round-trip. Today at 1 p.m. EST, United began matching while American raised several hundred thousand additional fares to complete its match. Alaska Airlines has only upped its code share routes (to stay at interline partnership price equilibrium). No activity so far from Southwest or JetBlue.

Historically US Airways has not scuttled many hikes so I don’t believe the newly-minted American will change this dynamic much.  It will be interesting to see how much leverage Southwest Airlines’ potential lack of participation has in scuttling domestic hikes given the culmination of four years of consolidation. Will the new legacies tiptoe around Southwest, be forced to rollback the hikes or completely disregard the airline? More updates to come.

Tuesday, Dec. 10, 2013:

At 1 p.m. eastern time Tuesday, Delta Air Lines initiated a hike of $4 to $10 round-trip across the bulk of the carrier’s domestic route system (see chart below).

12th Hike Attempt of the Year

This is the twelfth attempt by a U.S. airline to raise ticket prices in 2013 (and most of the attempts were Delta-initiated), but so far domestic carriers have had little success raising base airfares – as consolidation and the transition to completely full flights continues.

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Base and Market Airfare Price Gap

For the upcoming peak holiday period, the gap between base and market selling prices for the most convenient itineraries is the highest we have tracked – as carriers continue to get incrementally better at monetizing their sushi menu of add-on fees.

The last successful December domestic airfare hike was 2010, when oil prices were in the low $90’s per barrel. The price of oil as of this writing is in the upper $90’s.

Here is what the hike attempt picture looked like in previous years:

  • 2012: 15 hike attempts
  • 2011: 22 hike attempts
  • 2010: 4 hike attempts
  • 2009: 3 hike attempts

Watch for updates above if significant matching activity occurs in the next 36 hours.

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Published: December 10, 2013