Wednesday, December 15, 2010

American Airlines starts fare hike, others pursue

American Airlines started on Monday a domestic airfare hike of $5 one-way for flights over 500 miles ($10 roundtrip) and $3 one-way for shorter flights ($6 roundtrip) across the bulk of its route system, says Rick Seaney, CEO of

Its competitors, as well as low-cost airlines, have matched the hike throughout Tuesday, including Continental, Delta, United, US Airways, Virgin America, Alaska, Frontier and Southwest. It "virtually guarantee(s) this to be one of the few victorious hike efforts this year," he says.

Domestic airlines have struggled to increase airfares this year and their earlier attempts have failed as competitors didn't match. "Regardless of the progressively improving economy, airlines persist to live by recessionary domestic pricing motto of not being $1 more or less than their competitor," he writes in an e-mail.

Still, consumers have been paying extra for tickets this year as airlines employ different strategies to increase prices. Airlines have added travel surcharges of up to $30 one-way for high demand periods and sold less discounted seats, he notes. They also kept their planes entirely full.

"With oil prices hovering near 2010 highs of $90 a barrel and airline executives' recent positive statements concerning winter demand, it is likely we will observe more domestic hike efforts as we head into 2011," he says.

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