American, three others hike fares by $5

Four major U.S. airlines raised fares by $5 each way on Friday, following Southwest's fare hike last week. Airwise News reports that Continental initiated the increase, followed by American, Delta, and Northwest. Though United and US Airways haven't matched yet, you can bet they will if the increase sticks.

Jet fuel costs spurred this increase, according to Julie King, a spokesperson for Continental. "A one cent rise in the price per gallon of jet fuel adds about $18 million to Continental's cost over the course of a year," says King.

Advertisement

The fare hike comes ahead of the summer travel season, typically the airlines' busiest and most profitable season. Several airlines have recently warned of weak bookings and revenue heading into summer, with fares lower than in the past two years.

Personally, I've been seeing higher-than-usual prices for travel this July. If demand truly is faltering, it makes me wonder why the airlines would choose to raise prices now. I know I'm more likely to travel if I can find a cheap flight, so raising prices in the face of lower demand seems counterintuitive.

This year, many fare increases have been rolled back soon after they were announced, so I wouldn't be surprised to see that happen in this case as well.

Read comments or add your own insight!
Please enable JavaScript to properly view and use this web site.