Airlines Hike Fares Third Time in a Month
"We haven't seen this pace of domestic airfare hikes since 2007 when fuel prices began to jump dramatically in the last quarter and airlines began to institute fuel surcharges," says Rick Seaney, chief executive officer of FareCompare, a company that tracks fare trends.
But rising fuel prices may not be to blame this time.
Seaney believes that although fuel prices are "hovering near recent highs," the hikes are more likely related to stronger demand for fewer seats.
He says the latest round of hikes began in an unusual way.
FareCompare's tracking software detected "a relatively minor amount" of airfare hike activity among major U.S. carriers in Northern and Midwestern cities over the past week.
Small fluctuations are normal and don't usually result in an across-the-board increase.
But this time, Southwest Airlines jumped in late Friday evening and raised fares across most of its routes, Seaney says. Southwest rarely initiates a fare increase.
All the major lines have since matched including American, Continental, Delta, United and US Airways, and low-cost carrier Frontier.
We've seen this before of late.
On Dec. 14, American Airlines initiated a $10 roundtrip fare hike, that was also matched by rivals, including Alaska, Continental, Delta, United and US Airways, as well as Frontier, Southwest and Virgin America.
Two days after Christmas, United Airlines and Continental Airlines imposed a $20 roundtrip "peak travel day" surcharge for most domestic routes. American then adopted the $20 fare increase on most flights and other major carriers matched the move.
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