CO hikes fuel surcharge

[General Lee]

Continental Hikes Existing Fuel Surcharge
Friday March 26, 8:58 am ET


CHICAGO (Reuters) - Continental Airlines (NYSE:CAL - News) on Friday said it increased an existing fuel surcharge on some tickets to $15 each way from $10 for travel in the United States and between the United States and Canada.



The Houston-based No. 5 U.S. airline said the higher surcharge would help it offset dramatically higher fuel expenses in 2004. The carrier said its fuel expense last year was more than $1.2 billion.

Continental has warned that its plans to break even or be profitable this year are at great risk due to high jet fuel prices. Analysts also have said chances that the industry will return to profitability this year have dwindled as the cost of jet fuel rises.

Jet fuel, the industry's second-biggest operating expense after labor, makes up about 12 to 15 percent of operating costs.

Airlines have tried several times this year to raise prices to offset fuel costs. But with relatively weak demand, fuel surcharges have failed to stick.




That's the way to do it boys!! I hope everyone does it!

Bye Bye---General Lee

 

[DLslug]

Gen and all:

IT'S ABOUT TIME!!!

Someone has got to get these dam* air fares out of the dirt where they have been too long.

Air fares too low are obvoius when you can fly anywhere in this country for $199.00 or less. This doesn't even come close to pay for the service that is provided.

Get air fares up and hope oil prices come down...these are the fundamental problems facing us all.

All for now.

DLslug

 

[General Lee]

DLSlug,

You are the MAN! Finally someone else understands. You can be my Wing Man ANYTIME.... Take Care.

Bye Bye--General Lee

 

[SKLJ]

Now if NWA will not f@ck this up we might get somewhere.

 

[MedFlyer]

Hopefully this one sticks as it is desperately needed for the majors. I won't hold my breath though.

We've seen these hikes fail time after time. DL tried it twice in the past month, but both failed. The big problem is that the LCC's are in the driver's seat when it comes to price. Since most (if not all) of the LCC's are profitable, there's no great need to raise fare.

 

[General Lee]

The key here is to hike the fuel surcharges on "selected" city pairs. You can raise the fares on cities that the LCCs do not go to. I read something that said CO raised the fares on certain fares from certain cities--and those are sticking. It will bring the revenue up some what---and that is GOOD. How about all of those RJ cities that the LCCs don't fly to? Sorry Peoria----time for a fare increase....

Bye Bye--General Lee

 

[SKLJ]

Continental's fare increase might stick

http://www.chron.com/cs/CDA/ssistory.mpl/business/2470366

March 26, 2004, 11:43PM

Continental's fare increase might stick
By BILL HENSEL JR.
Copyright 2004 Houston Chronicle
Continental Airlines is adding a fuel surcharge of $5 each way on select flights in another attempt to offset the high cost of fuel.

This is its third such attempt since mid-February, but this one may have won support from a key player that quashed previous bids.

Both American Airlines and United Airlines, the world's biggest air carriers, had matched the increase as of Friday afternoon.

They later were joined by Northwest Airlines, a traditional fare increase spoiler.

It was difficult to tell late Friday whether the responses of Northwest and other airlines will sustain this $10-per-round-trip fare increase because so many routes could have been changed.

Northwest announced late Friday it had selectively matched some increases, noting it was for "some discounted fares in domestic markets where it competes with Continental."

The increase is for tickets for travel in the United States and between the United States and Canada, Houston-based Continental said.

Travel expert Terry Trippler said it was hard to determine how far-reaching the newest fare increase attempt is.

"Because the airlines have done so well with the word `selective,' it is almost impossible to know the scope of any increases or changes," Trippler said. It appears to be for most domestic flights.

The proposed increase last month was a blanket increase on all routes. It stalled when Northwest only matched on select routes.

There is also a semantic difference on Friday's announcement: This is called a fuel surcharge while the other was labeled a fare hike.

Whether the price hike will stick likely will be determined in the next few days.

The last successful fuel-related increase was when Continental put the $10 fuel surcharge in place in February 2003.

Continental noted its fuel expense was more than $1.2 billion last year and that current fuel prices will make this year's fuel expense "dramatically higher."

"Just a little over two years ago, the price of crude oil was under $20 per barrel," Continental said in a statement. "The price for that same barrel of crude oil recently exceeded $37 per barrel -- a jump of 85 percent."

The price of a barrel of crude oil was up 22 cents Friday, closing at $35.73.

Continental CEO Gordon Bethune said earlier this month that high fuel prices could reduce the carrier's annual earnings by $450 million.

For every $1 increase in the price of crude oil, it costs Continental $38 million, according to the carrier.

Behind labor, fuel is the second-largest expense for airlines.

Some analysts have said the major network carriers are suffering because so-called low-cost carriers are dictating the airfare pricing structure.

Northwest's action to selectively match Continental capped an active week for the Minnesota-based carrier.

Thursday, Northwest matched a $4 each way increase imposed by America West on some fares.

Northwest matched the increase on the fares it offers to compete with America West in overlapping markets.

And Northwest also matched a $5-each-way fare increase imposed by ATA Airlines on many of its fares earlier in the week.

Northwest said it matched the increase in overlapping markets with ATA, on the fares it offers to compete with that airline.

Delta Air Lines, the nation's third-largest carrier, had not responded to the price increase late Friday.

Northwest is the nation's fourth-largest air carrier.

Continental is the fifth.

 

[General Lee]

"Delta Air Lines, the nation's third-largest carrier, had not responded to the price increase late Friday."


Obviously, it is the Delta Mainline pilot's fault......It seems like they don't want to increase revenue right now..??? What gives?


Bye Bye--General Lee

 

[Heavy Set]

Why would DAL give up the opportunity to make more money (even if on selected routes)? It don't make much sense... What would the shareholders and analysts have to say?

 

[festus]

Updated: 09:03 PM EST
Northwest matches $5 fare hike by Continental

NEW YORK, March 26 (Reuters) - Northwest Airlines on Friday became the second airline to hike its fuel surcharge, matching a $5 each way increase on selected flights that was announced earlier in the day by Continental Airlines .

Northwest said the fare hikes, which would raise the fuel surcharge to $15 from $10, affect service in the United States and Canada. The increases are an attempt to help offset dramatically higher fuel costs this year.

Many airlines have not sufficiently hedged their exposure to rising jet fuel prices, leaving them open to the risk of even higher prices. Industry analysts have also said chances for U.S. airlines to return to profitability this year have dwindled as the cost of jet fuel has soared.

Jet fuel, the industry's second-biggest operating expense after labor, makes up about 12 percent to 15 percent of operating costs.

Airlines have tried several times this year to raise prices to offset fuel costs, but with relatively weak demand, fuel surcharges have failed to stick.


03/26/04 21:02 ET

 

[calfo]

'Bout time NWA got with the program... Now they can get back to painting their airplanes with one hand, while asking for givebacks and slapping the employees with the other.

 

[SKLJ]

NWA spoils again

http://www.chron.com/cs/CDA/ssistory.mpl/business/2476637


March 30, 2004, 11:34PM

Continental retreats on fare hike
Northwest spoiler for fuel increase
By BILL HENSEL JR.
Copyright 2004 Houston Chronicle

For the third time this year, a move by Continental Airlines and others to raise fares ran headlong into resistance by Northwest Airlines.

Houston-based Continental said Tuesday it dropped the $5-each-way fuel surcharge it started Friday for what it called "competitive reasons."

Continental didn't name names, but once again Northwest Airlines would not go along with the across-the-board price increase.

Late Friday, Northwest said it had matched in some markets. But to other network carriers, the Minnesota-based airline's move seemed to be in very select markets.

American, Delta and United airlines, which had matched the $10 round-trip increase that was put in place for most domestic and U.S.-Canada flights, also pulled back.

The problem was the large number of smaller airports that are served by Northwest, compared with those served by Continental and others, surmised Tom Parsons of Bestfares.com.

Northwest may think differently because it probably has the biggest number of small cities in its route system, he said.

"The big airlines have to stay competitive, and by staying competitive, they have to give someone the shaft — and it ends up being the small cities," Parsons said.

But Parsons said Northwest's perspective may be that if you get fares up too high, "you are only going to see taillights from these small cities."

Northwest will balk at fare increases in small markets because it wants to keep the business passengers who are willing to pay higher fares flying out of Green Bay instead of driving to Milwaukee to take advantage of cheaper fares, he said.

The major airlines have tried five times since December to raise ticket prices, according to Parsons, who expects more attempts shortly. Whether they try to tie it to fuel prices is immaterial, he said.

"They can call it pink, yellow or green, but at the end of the day it is still a fare hike," he said.

The last successful fuel-related increase was when Continental put the $10 fuel surcharge in place in February 2003. With last week's failed increase, the surcharge remains at that level.

Continental noted last week that its fuel expense was more than $1.2 billion last year and that current fuel prices will make this year's fuel expense "dramatically higher."

The price of crude oil was under $20 per barrel just over two years ago but is now above $36.

Continental Chief Executive Officer Gordon Bethune said earlier this month that high fuel prices could reduce the carrier's annual earnings by $450 million. For every $1 increase in the price of crude oil, it costs Continental $38 million, according to the carrier. Behind labor, fuel is the second-largest expense for airlines.

Some analysts have said the major network carriers are suffering because so-called low-cost carriers are dictating the airfare pricing structure. The reason is because low-cost carriers have captured a much larger market share in recent years.

"But the majors can't afford to let these low-cost airlines take market share," Parsons said. "They have to survive, and even though they probably don't make money on some fares, they match 'em."

 

[Pickle]

From the article posted by SKLJ: "Northwest will balk at fare increases in small markets because it wants to keep the business passengers who are willing to pay higher fares flying out of Green Bay instead of driving to Milwaukee to take advantage of cheaper fares, he said."

To quote Pete from O Brother Where Art Thou "That don't make no sense!!"

If there fares are already higher in Green Bay, but the people put up with it, as opposed to driving to Milwaukee, then $5 shouldn't make a difference. I mean, if you are already happily paying higher fares, then why not keep doing it?

I agree with what others have said, time to raise thses GD fares a little, I mean come on, it used to take 6 or 8 months to get from the midwest to the west coast, now you can do it in 4 hours. That has got to be worth something!!

 

[Mikes Apartment]

Does anyone else think that unicorns are pretty?

 

[General Lee]

I love your web page......and I like unicorns---they are really pretty, especially flying ones that have rainbows behind them....

Bye Bye--General Lee