Mon, Jul 30, 2012
Legacy Carriers Expected to Match
United Airliines on Friday announced fare hikes of $4 to $10 roundtrip on most of its domestic routes. It is the first attempt by an airline to boost domestic fares in three months. While other airlines, like Jet Blue, have increased fares on select routes this week, United wants to extend this fare increase systemwide.
The fare comparison website, FareCompare.com reports this is the seventh attempt at price increases this year; three have been successful. "Historically, a coin flip determines whether a hike attempt broadly sticks," FareCompare CEO Rick Seaney said.
Seaney says that for consumers it's all about testing to see if they will "bear the brunt of these hikes." For the airlines, he says it's all about probing to see if their competitors will match the increases or stand their ground.
"No airline wants to be $1 more than their competitition today," said Seaney. "My guess is the legacy carriers will quickly match," he said. "If Southwest doesn't join in, the other carriers will either roll back or tiptoe around Southwest's routes."
Uneasiness over recent economic forecasts and rising oil prices could be behind this latest round of increases suspects Seaney.
In 2011, only nine of 22 fare hike attempts were successful.
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