Delta Air Lines Inc., Southwest Airlines Co. and other major U.S. carriers raised fares $20 round trip in the first successful price increase for most domestic routes this year.
The higher prices, initiated separately on June 10 by Delta and US Airways Group Inc., gradually were matched by other U.S. carriers, including Southwest, the largest low-fare airline. It was the first broad increase in 2009, US Airways and American Airlines confirmed.
An industrywide increase would ease pressure on airlines that have been slashing prices to win customers during the recession. Those fare reductions, a drop in business travel and rising jet-fuel prices will push U.S. carriers to a combined $1 billion in losses this year, according to the International Air Transport Association.
“Domestic airlines have been searching for a bottom the past six months, and it appears this hike, along with a slowdown in domestic airfare sales, is the first sign that bottom may be near this quarter,” Rick Seaney, chief executive officer of ticket research firm FareCompare.com, said today in an e-mail.
Airlines often rescind fare increases that aren’t matched by others, to avoid having higher prices than competitors.
‘Increasing Cost Pressures’
Delta, the world’s largest airline, raised fares $10 each way in U.S. markets and $10 to $40 each way on some international routes “in response to increasing cost pressures on our business,” said Betsy Talton, a spokeswoman for the Atlanta-based company.
Southwest’s price boost of $10 each way was its largest this year, said Paul Flaningan, a spokesman for the Dallas-based carrier.
Delta, American, Continental Airlines Inc. and Southwest all recently have said they will trim more seating capacity this year than initially planned. The carriers hope fewer available seats will enable them to raise ticket prices more often.
“We always walk a fine line on what we charge our customers and remaining a profitable, viable airline,” said Southwest’s Flaningan. “There is no clear evidence the economy will improve anytime soon and this is an extremely difficult time for the entire airline industry.”
Yields, or average fare per mile, have fallen each month this year through April, the latest month for which figures are available, according to the Air Transport Association, the Washington-based lobbying group for major U.S. carriers.