June 7, 2005, 12:11AM
Carriers call off fare hike
Analysts say limited matching by industry is sign increase won't fly
By BILL HENSEL JR.
Copyright 2005 Houston Chronicle
The latest fare increase floated by most of the nation's airlines has fallen apart.
United Airlines initiated the increase Thursday night, and other airlines matched it Friday. But not all the carriers matched the same way, analysts said Monday.
For example, JP Morgan airline analyst Jamie Baker characterized the participation by Houston-based Continental and by Northwest Airlines in the price increase as limited.
But Continental said that it essentially had matched what American Airlines did, which mirrored the hike United put in place — minus an Aug. 16 expiration date United used.
Baker also noted that low-cost carriers didn't climb on board with the increase.
The proposed fare increase called for many round-trip fares to increase $10 for flights under 1,000 miles and $20 for longer flights.
Travel expert Terry Trippler noted that the increase began unraveling Sunday afternoon when American and Northwest pulled back. Continental followed Monday morning, he said.
Trippler, of Cheapseats.com, said he thinks the airlines were sending a message to United. The carrier is in bankruptcy court and will not have to meet some of its pension obligations, so other carriers may resent it for leading a fare increase.
"This is clearly a shot across the bow of United, saying, 'You've been operating under bankruptcy, and you are not controlling airfares; we are,' " Trippler said.
Airlines like American and Northwest may have been toying with United by even agreeing to the fare increase in the first place, he said.
It wouldn't be surprising if a carrier other than United proposed a fare increase later this week, he said.
The old-line carriers have been raising domestic prices all year, usually citing continued high fuel prices.
But, generally speaking, all of those carriers have to match a given increase, or it will be withdrawn.
Baker said the eight increases put in place this year that have stuck have offset higher fuel prices by $5 to $6. Without that, matters in the troubled airline industry would be even worse, he said.
Also, there is disagreement within the industry over the $499 one-way cap Delta put in place earlier this year as part of its "Simplifares" program, Baker said.
"We believe Delta's cap will eventually need to rise for future broad industry fare increases to occur," the analyst said.
[email protected]
Carriers call off fare hike
Analysts say limited matching by industry is sign increase won't fly
By BILL HENSEL JR.
Copyright 2005 Houston Chronicle
The latest fare increase floated by most of the nation's airlines has fallen apart.
United Airlines initiated the increase Thursday night, and other airlines matched it Friday. But not all the carriers matched the same way, analysts said Monday.
For example, JP Morgan airline analyst Jamie Baker characterized the participation by Houston-based Continental and by Northwest Airlines in the price increase as limited.
But Continental said that it essentially had matched what American Airlines did, which mirrored the hike United put in place — minus an Aug. 16 expiration date United used.
Baker also noted that low-cost carriers didn't climb on board with the increase.
The proposed fare increase called for many round-trip fares to increase $10 for flights under 1,000 miles and $20 for longer flights.
Travel expert Terry Trippler noted that the increase began unraveling Sunday afternoon when American and Northwest pulled back. Continental followed Monday morning, he said.
Trippler, of Cheapseats.com, said he thinks the airlines were sending a message to United. The carrier is in bankruptcy court and will not have to meet some of its pension obligations, so other carriers may resent it for leading a fare increase.
"This is clearly a shot across the bow of United, saying, 'You've been operating under bankruptcy, and you are not controlling airfares; we are,' " Trippler said.
Airlines like American and Northwest may have been toying with United by even agreeing to the fare increase in the first place, he said.
It wouldn't be surprising if a carrier other than United proposed a fare increase later this week, he said.
The old-line carriers have been raising domestic prices all year, usually citing continued high fuel prices.
But, generally speaking, all of those carriers have to match a given increase, or it will be withdrawn.
Baker said the eight increases put in place this year that have stuck have offset higher fuel prices by $5 to $6. Without that, matters in the troubled airline industry would be even worse, he said.
Also, there is disagreement within the industry over the $499 one-way cap Delta put in place earlier this year as part of its "Simplifares" program, Baker said.
"We believe Delta's cap will eventually need to rise for future broad industry fare increases to occur," the analyst said.
[email protected]
