Latest Airline Fare Hike Unravels

Posted Mar 29th 2011 12:00 PM

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united continental airlines fare

United Continental

A $10 domestic fare hike, launched last week by United Continental Holdings, has fallen apart after the nation's low-cost carriers failed to match several major U.S. airlines.

The collapse marks the second time in a month that the major airlines withdrew a domestic fare increase, following six successful attempts since the beginning of the year. Analysts say the pullback may be a temporary sign that advance sales are starting to slow.

"It's also a sign of possibly reaching sort of that saturation point for consumers, at least for the short term, until consumers get really serious about shopping for the late spring and early summer," said Rick Seaney, founder and chief executive of Farecompare.com.

The fare hikes have been driven largely by the skyrocketing price of oil, which hit $105 a barrel in recent days, due to the Libyan civil war and political unrest in other parts of North Africa and the Gulf. Libya only supplies 2% of the world's oil supply, but the violence has led to increased speculation by investors.

Fuel has historically been one of the largest expenses by a commercial airline and several carriers have announced plans to cut capacity growth or raise fees in response to increased fuel costs.

United Continental, the parent company of United Airlines and Continental Airlines, initiated the $10 fare increase last week, and rival Delta Air Lines responded with a staggered series of fare increases ranging from $6 to $14 round trip, based on the length of the flight.

Delta rolled back that increase, but then matched the $10 fare increase along with US Airways. However, low-cost carriers like Southwest and JetBlue Airways, failed to jump in.

The low-cost carriers have raised some fares in recent months, but have largely nixed several of the domestic fare hikes led by the traditional carriers like American, United Continental and Delta.

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Happy Face

I will avoid flying United Airlines. They've delayed, cancelled, re-routed, changed airports, changed airlines and made me very late numerious times. In my opinnion, they're the worst airline out there. How much more can they do things like this before they go under?

March 29 2011 at 3:54 PM Report abuse rate up rate down Reply
Minstrel

Hmmm. Does anyone remember the airlines dropping the luggage fees when oil prices went down after they instituted the fees after the last oil increase? It seems prices always seem to go up but never go down even after whatever the catalyst was reverses itself.

March 29 2011 at 3:33 PM Report abuse rate up rate down Reply
lkomalley

I can't believe that we the flying public put up with change fees.... I was just hit with a $250 x 2 change fee because I could not make my flight to China due to a broken foot. I have been a member with Delta for over 25 years and even with almost 3,000,000 miles thay DON'T care. I am looking for an airline that does not have change fees if you fly 100,000 to 150,000 miles a year. If there is one out there someone let me know and I will start over....

March 29 2011 at 3:09 PM Report abuse rate up rate down Reply
John Michael

The comment:
.......due to the Libyan civil war and political unrest in other parts of North Africa and the Gulf. Libya only supplies 2% of the world's oil supply, but the violence has led to increased speculation by investors.....
Should more correctly state that SPECULATORS have driven the price of oil to outrageous prices and the government should take corrective action. Libya produces 1.3 mm barrels per day-thats their out put. It has nothing to do with the price of oil today. SPECULATORS on
Wall Street are driving the price to the damage of our economy short term

March 29 2011 at 2:40 PM Report abuse rate up rate down Reply

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