May 12, 2008
Three big airlines raise round-trip ticket prices $20
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NEW YORK - The three biggest U.S. airlines said yesterday they have again raised ticket prices, this time by $20 round trip, to recoup rapidly rising fuel costs.
The increases by American Airlines, United Airlines and Delta Air Lines affect the carriers' fuel surcharges, which now total $130 roundtrip on many flights. That means passengers on some cheap flights could be paying more in fees and taxes than for the airfare itself.
Delta Air Lines Inc. initiated the increase, which applies to most domestic routes. It is the Atlanta-based carrier's second increase in just over a week. The previous increase was quickly matched by competitors.
"This is obviously a result of the current market, and fares have to reflect the cost of doing business," spokeswoman Betsy Talton said.
Representatives for AMR Corp.'s American Airlines and UAL Corp.'s United Airlines said the carriers matched the increase on most routes yesterday.
Airlines have been racing to raise airfares, tack on surcharges, and charge for amenities such as extra bags and legroom as they struggle to cope with soaring energy prices. Many airlines now count fuel as their biggest cost.
The price of jet fuel, like gasoline, has risen rapidly along with the price of crude. A gallon on the spot market in New York was selling for $3.57 as recently as Tuesday, according to the Energy Information Administration. That is up about 78 percent from this time last year.
At the same time, carriers are cutting back on flights to reduce costs and maintain their pricing power as the economy slows. Even so, analysts expect many large carriers to post large losses this year.
"I would say to my CEOs: Fasten your seat belts, tougher times are coming," Giovanni Bisignani, director general and chief executive of the International Air Transport Association trade group, said in an interview.
Rick Seaney, chief executive of airfare research site FareCom- pare.com, said the increases mean that fees and taxes together now cost more than the actual base fare on several short-haul flights.
"With a backdrop of a slowing economy, I continue to look for a tipping point where domestic air travelers begin to significantly push back on record high airline ticket prices. At best, the jury is still out," Seaney said in an e-mail.
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