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Latest airfare hike likely to stick

Posted by Paul Makishima, Globe Assistant Sunday Editor  March 7, 2011 12:11 PM

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Looks like it's been decided: Travelers will have to live with the recent airfare hike launched by the carriers. Over the weekend, Southwest Airlines Co., which flies more US domestic customers than any other airline, threw its lot in with the other major carriers who were pushing to nudge up fare prices in an attempt to help offset surging fuel prices.

Delta kicked off the move last week by raising many fares by up to $20 per round trip. American joined in but only sought a $10 hike, a decision that appeared to be gaining favor with other carriers.

The airline business is highly competitive. One carrier may try to raise prices but if all its peers don't follow along the increase generally gets retracted. This increase was looking pretty solid before but after Southwest jumped in it's basically locked in.

This from the Associated Press:

It's the sixth time airlines have raised fares already this year. FareCompare.com CEO Rick Seaney says leisure travelers may now have to pay $260 for a ticket that cost $200 back on Jan. 1 ...

Southwest waited three days before matching American's move on Friday night. Other airlines had rolled back fare hikes on routes where they compete with Southwest and other discount carriers, but they revived the full increase once Southwest raised prices too, Seaney said.

Low-cost airlines JetBlue, AirTran and Virgin America also raised prices, virtually assuring that the increase will become permanent, he said.

There were only four broad price increases in all of 2010, and two of those occurred in December. The flurry of fare hikes so far this year mirrors the rapid rise in fares and fuel surcharges in early 2008, when oil prices were heading toward record levels. Oil prices have soared in the past three weeks, approaching $107 a barrel on Monday, because of unrest in the Middle East.


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