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Costly oil + better economy = higher fares

Jan. 20, 2011 at 10:17 AM   |   Comments

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FORT WORTH, Texas, Jan. 20 (UPI) -- Air travel in the United States is more expensive as airlines raise ticket prices in response to rising fuel costs and a better economy, fare trackers say.

Rick Seaney, CEO of FareCompare.com said four price hikes have occurred since mid-December, with two industry-wide fare increases implemented since Jan. 1, USA Today reported Thursday.

The most recent increase was Monday, when Delta raised fares up to $20 for a round trip and United increased its ticket prices up to $10 for a round trip on most domestic routes. Other carriers followed their leads.

Airline officials say a huge reason for the fare hikes is the rising cost of oil.

"The most worrisome threat we see on the horizon right now is the price of fuel," Gerard Arpey, American Airlines chief executive officer, said in a letter to employees Wednesday.

Arpey said the Fort Worth, Texas-based airline expected fuel costs to increase more than $1 billion this year and "we will need to find ways to raise revenues to offset the impact."

When legacy airlines raise ticket prices, a low-cost carrier usually stands pat, forcing prices to go back down eventually, USA Today said. But traditional holdout Southwest Airlines has been going along with the fare increases, even taking the lead recently. The carrier started an industry-wide fare increase Jan. 7, and then raised its prices this week after Delta and United did.

"Southwest has been the stick in the mud over hikes in the last three or four years," Seaney said. "Southwest is acting more like a (traditional network) airline."

Southwest spokeswoman Whitney Eichinger said the increases, ranging from $2 to $5 one way, "help offset higher fuel costs."

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