lowecur
Well-known member
- Joined
- Sep 14, 2003
- Posts
- 2,317
Well some sanity is showing on the LCC front. I'll bet most of the hikes are $3.
It will be interesting to see if Jetblue, AirTran, Song, and Frontier match. It's really peanuts, as even the LCC's need fare hikes of about 15% to make any money from operations(excluding fuel hedge).
Other Airlines Match Northwest's Fare Increase
By SUSAN CAREY
Staff Reporter of THE WALL STREET JOURNAL
March 13, 2005 4:08 p.m.
A second fare increase in two weeks put into place Thursday by Northwest Airlines Corp., which like its rivals is being slammed by record-high fuel prices, appeared to be sticking Sunday. Meanwhile, Southwest Airlines, the largest low-cost carrier, said it raised its fares on Friday night in all but a few markets by $1 to $3 one-way to help recoup the rising cost of fuel.
A Southwest spokeswoman said the increases had been planned and weren't in reaction to the Northwest action. Southwest, the nation's sixth-largest airline by traffic, is much better hedged against fuel fluctuations than most of its competitors.
Northwest, the nation's fourth-largest airline, for a second time raised many of its domestic leisure fares by $10 to $20 roundtrip, depending on the distance, with exceptions in markets served by some discounters. Fare watchers said Sunday that many discount airlines also raised their prices to a lesser degree, but JetBlue Airways was a distinct holdout.
According to J.P. Morgan analyst Jamie Baker, several larger carriers including AMR Corp.'s American Airlines, Delta Air Lines and US Airways Group Inc., broadly matched the Northwest increase by Friday. UAL Corp.'s United Airlines confirmed Friday night that it had raised its fares as well.
If there are any significant hold-outs in the nonbudget airline markets that have been excluded from the action, it is possible the initiative will be rescinded, something that typically would occur Monday or the next day. But Mr. Baker said in a research note that he expected the effort to stick. "Not enough to negate $55 [per barrel] oil, though encouraging nonetheless given [the] industry's uninspiring track record at boosting revenue," he said.
If the initiative doesn't fall apart, it would represent the second successful fare increase since Delta in January revamped its pricing structure and cut its fares by nearly half for travel in the continental U.S. Other airlines quickly matched Delta's move, which caps the highest business fares at $499 one-way and does away with Saturday-night stay restrictions, in markets where they compete with Delta. Competitors have complained that Delta's action is damping the entire industry's revenues.
Hit by extremely high fuel prices, overcapacity and weak prices, airlines have been desperate to raise their fares. Most are entering their fourth consecutive year of losses, five U.S. carriers are in bankruptcy-court protection and Delta last week disclosed that it again is in danger of filing for Chapter 11. This fare increase comes ahead of expected stronger ticket demand in the busy spring and summer travel seasons.
Obscuring the latest price increase is a big spring fare sale led by United and followed by one launched by US Airways, both criticized by rivals as foolhardy at a time when fuel prices are soaring. But United executives told employees in a telephone recording last week that its sale doesn't undermine the overall ticket increases that have been achieved recently. "Instead, it is a well-targeted … promotional fare sale with a very limited duration" aimed at leisure travelers and is "revenue-positive" in this slow travel period, they said.
It will be interesting to see if Jetblue, AirTran, Song, and Frontier match. It's really peanuts, as even the LCC's need fare hikes of about 15% to make any money from operations(excluding fuel hedge).Other Airlines Match Northwest's Fare Increase
By SUSAN CAREY
Staff Reporter of THE WALL STREET JOURNAL
March 13, 2005 4:08 p.m.
A second fare increase in two weeks put into place Thursday by Northwest Airlines Corp., which like its rivals is being slammed by record-high fuel prices, appeared to be sticking Sunday. Meanwhile, Southwest Airlines, the largest low-cost carrier, said it raised its fares on Friday night in all but a few markets by $1 to $3 one-way to help recoup the rising cost of fuel.
A Southwest spokeswoman said the increases had been planned and weren't in reaction to the Northwest action. Southwest, the nation's sixth-largest airline by traffic, is much better hedged against fuel fluctuations than most of its competitors.
Northwest, the nation's fourth-largest airline, for a second time raised many of its domestic leisure fares by $10 to $20 roundtrip, depending on the distance, with exceptions in markets served by some discounters. Fare watchers said Sunday that many discount airlines also raised their prices to a lesser degree, but JetBlue Airways was a distinct holdout.
According to J.P. Morgan analyst Jamie Baker, several larger carriers including AMR Corp.'s American Airlines, Delta Air Lines and US Airways Group Inc., broadly matched the Northwest increase by Friday. UAL Corp.'s United Airlines confirmed Friday night that it had raised its fares as well.
If there are any significant hold-outs in the nonbudget airline markets that have been excluded from the action, it is possible the initiative will be rescinded, something that typically would occur Monday or the next day. But Mr. Baker said in a research note that he expected the effort to stick. "Not enough to negate $55 [per barrel] oil, though encouraging nonetheless given [the] industry's uninspiring track record at boosting revenue," he said.
If the initiative doesn't fall apart, it would represent the second successful fare increase since Delta in January revamped its pricing structure and cut its fares by nearly half for travel in the continental U.S. Other airlines quickly matched Delta's move, which caps the highest business fares at $499 one-way and does away with Saturday-night stay restrictions, in markets where they compete with Delta. Competitors have complained that Delta's action is damping the entire industry's revenues.
Hit by extremely high fuel prices, overcapacity and weak prices, airlines have been desperate to raise their fares. Most are entering their fourth consecutive year of losses, five U.S. carriers are in bankruptcy-court protection and Delta last week disclosed that it again is in danger of filing for Chapter 11. This fare increase comes ahead of expected stronger ticket demand in the busy spring and summer travel seasons.
Obscuring the latest price increase is a big spring fare sale led by United and followed by one launched by US Airways, both criticized by rivals as foolhardy at a time when fuel prices are soaring. But United executives told employees in a telephone recording last week that its sale doesn't undermine the overall ticket increases that have been achieved recently. "Instead, it is a well-targeted … promotional fare sale with a very limited duration" aimed at leisure travelers and is "revenue-positive" in this slow travel period, they said.
