Southwest is quietly raising fares for thousands of flights to combat what it calls “cost pressures” it expects will impact its business into 2019. And while these increases are indeed minor—said to be only $2 to $5 one-way—the move by the low-cost line could signal the possibility that airfares will rise across the board.
In Southwest’s case, costs are increasing at a higher rate than anticipated as the airline invests in technology upgrades, new planes and expanded airport facilities, according to Bloomberg. That will result in a 3 percent increase in costs, rather than the previously projected 1 percent, even excluding fuel. Southwest also indicated these circumstances could continue into 2020, which in turn suggests fares could continue to creep upward.
Will Others Follow Suit?
Southwest’s situation seems fairly specific to its own business, but that isn’t to say other airlines wouldn’t match the discount carrier’s new fares.
That said, demand for travel remains strong, and Bloomberg points out that makes it easy for airlines to raise fares. “The revenue outlook for 2019 is very good,” CEO Gary Kelly told the publication. In airline terms, this means planes are full and airlines should be able to charge healthy fares on flights. Good news for them and the airlines in general, but an ominous signal to travelers.
One things travelers can count on is a continued uptick in ancillary fares, especially as airline continue digging in on a la carte offerings in the spirit of Basic Economy. A new study estimates that U.S. airlines will rake in over $92 billion (yes, billion) from ancillary fees this year, up from $82 last year and a paltry $22 back in 2010, when such fees were just taking hold. Worldwide, airlines will rake in $871 billion from fees this year alone.
That estimate works out to roughly $21 per passenger globally, which serves as an important reminder that fares are not the only factor increasing the cost of travel these days.