After lull, airlines raise fares again

4th increase this year adding $4 to $10 per round trip within US
2012-07-24T00:00:00Z After lull, airlines raise fares againThe Associated Press The Associated Press
July 24, 2012 12:00 am  • 

DALLAS - Get ready to spend more on travel. Airlines are raising ticket prices again after a four-month lull that coincided with falling fuel costs.

Over the weekend, several big airlines matched United Airlines' increase in base fares of up to $10 per round trip within the U.S. Fare watchers said it was virtually certain that the new prices would stick, resulting in the fourth fare increase this year and the first since late March.

United raised fares Friday morning by $4 to $10 per round trip depending on flight length. Over the weekend, Delta Air Lines, American Airlines, US Airways, JetBlue and Virgin America all matched the move; so had Southwest Airlines and its AirTran subsidiary on flights of at least 500 miles. Southwest carries more passengers within the U.S. than anyone and is seen as a price-setter on many routes.

"Southwest participation virtually assures the hike will stick," said Rick Seaney, CEO of FareCompare.com.

J.P. Morgan analyst Jamie Baker said there could still be some tweaking as competitors respond to Southwest's decision to exempt short flights from the fare increase.

When airlines raise prices, not all passengers pay more. Airlines constantly promote sales, blunting the impact of the increases for sharp-eyed consumers who are willing to shop among carriers or fly on less-crowded days and off-hours.

The airlines raised domestic base fares nearly a dozen times last year, citing rising fuel prices, but they grew more cautious this spring as the economy weakened and jet fuel fell along with the decline in oil prices. From early April until late June, the spot-market price of jet fuel dropped 22 percent, but since then it has gained about 12 percent, according to government figures.

Airlines lost billions when fuel prices surged in 2008 and are trying to avoid a repeat. Hunter Keay, an analyst for Wolfe Trahan & Co., said the airlines should be able to pass along their higher costs like every other industry.

"Consumers have gotten a bargain deal for the last 30 years on travel. They've become spoiled," Keay said. "On an absolute (adjusted-for-inflation) basis, airfares are still comically low."

Airlines for America, a trade group of the biggest U.S. carriers, said average fares would be 50 percent higher if they had kept pace with inflation since 1979. Since 2000, the group said, airfares including fees have increased 15 percent compared to increases of 65 to 135 percent for Major League Baseball games, eggs, gasoline and college tuition.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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