U.S. Air Fare Hike Scaled Back

Filed in archive Aviation Travel on May 15, 2007

If you haven't booked your airfare for your summer vacation, it looks like you could save a little money - for now, at least.

On Monday, most of the major airlines that increased fares last week have scaled back on the rate hike. They were looking for a way to offset raising fuel prices (which is expected to hit record numbers) but the plan changed when Southwest refused to match the fare increase.

They've got to get some pricing strength or firmness going," Bainton said. "Somehow, this has got to stick."

A series of fare hikes seems to have faltered in recent weeks, with one increase earlier this month failing within a few days.

The fare hike was launched last week by Delta Air Lines in an effort to offset soaring jet fuel prices. Rival carriers, such as AMR Corp's American Airlines and Continental Airlines, quickly matched.

But the increase began to unravel on Sunday when American, Delta and United pulled fare hikes on routes that overlapped Southwest's service.

Industrywide fare hikes tend to collapse if they aren't broadly matched. Low-cost airlines like Southwest are the most likely spoilers of fare increases.

Airlines, which are gearing up for the busy summer travel season, have sought to raise fares to offset higher costs of jet fuel, which vies with labor as an airline's largest expense. The price of jet fuel has risen about 17 percent over the last four months.

But softening demand amid a weakening U.S. economy has made it difficult for airlines to pass on these higher costs.

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