US airlines ignore sluggish economy, hike fares
NEW YORK - The sluggish economy hasn't stopped airlines from hiking the price of flying ... again.
NEW YORK – The sluggish economy hasn’t stopped airlines from hiking the price of flying … again.
US Airways increased its one-way air fares as much as $5 for walk-up purchases, an increase that was matched by United Airlines, which is owned by United Continental, Delta Air Lines, and Southwest Airlines, according to a report from JPMorgan.
US Airways spokeswoman Tina Swail said a $3 increase applies to flights of less than 1,000 miles, while a $5 increase applies to flights of more than 1,000 miles.
This is the ninth successful fare increase for US Airways this year, according to the report. JPMorgan analyst Jamie Baker, co-author of the report, said the airline is betting that customer demand is strong enough to support a price increase.
“US Airways’ action appears consistent with commentary that overall revenue trends remains robust, with no measurable slippage in corporate demand,” wrote Baker in the report.
American Airlines, owned by AMR Corp., also has joined the fare hike, said Rick Seaney, chief executive of Farecompare.com, noting that the increase applies only to same-day, walk-up fares of the kind favored by business travelers.
“The airlines feel comfortable enough to hike business fares,” said Seaney. “This hike sort of defies where the economy is.”
But the Baker analyst said time will tell whether the fare increase will stick.
“The idiosyncrasies of fare filings (which we won’t bore you with) suggest that it may require the passing of the weekend before we can determine the success or failure of this latest initiative,” Baker wrote.
Harlan Platt, a finance professor at Northeastern University’s College of Business Administration with expertise in the airline industry, downplayed the fare increases.
“These are not substantial and will probably be ignored by most consumers,” he said. “It’s very similar to the local grocery store raising the price on a can of soup from $2.29 to $2.39. Most consumers just won’t even see it.”
Spokespeople for US Airways, American, United, Delta and Southwest all confirmed the fare hikes.