Latest airline fare increase seen failing

AP News
Posted: Nov 04, 2011 5:15 PM
Latest airline fare increase seen failing

The latest attempt by airlines to take advantage of full flights and boost their prices appears to have failed.

Most airlines decided not to go along with the higher fares, and those that had raised prices began rolling them back on Friday.

Analysts and industry insiders have been expecting that the weak economy will hurt travel demand, but the signs are mixed so far. Airlines say demand appears to be slipping among vacationers who are trying to save money, but corporate travel is holding up well.

US Airways Group Inc. raised fares Wednesday by up to $10 per round trip on higher-priced tickets usually favored by business travelers.

Delta Air Lines Inc. had matched the increase but decided to abandon it Friday, according to a spokesman. US Airways then began to roll back the fare increase too, a spokesman confirmed.

Most U.S. airlines raised prices by up to $10 on a roundtrip two weeks ago. That was the 11th broad fare increase this year, according to Jamie Baker, an airline analyst for J.P. Morgan.

Combined, the increases have boosted average fares by up to $70, according to a Citigroup analyst.

About half the attempted increases have failed, including another $10 bump last week.

Airlines often will roll back a fare increase if a major competitor refuses to match it. That's because the competitor's cheaper price will show up first when consumers go online to search flights by price.