US Airlines Raise Fares Twice In 2 Weeks

June 25, 2009

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US airlines raised fares for a second time in two weeks, a strong signal that ticket prices may be nearing a bottom, according to flight comparison company FareCompare.

Delta Air Lines raised rates by between USD$10 and USD$20 for round-trip flights, FareCompare data showed, and Continental Airlines also raised rates, which it began to do on Wednesday night.

The carriers joined American Airlines and United Airlines, which both boosted fares for US routes on Wednesday. US Airways is expected to bring up fares by Thursday, FareCompare said.

The increases are an attempt by airlines to lift prices ahead of the key summer season, typically a strong period for the airline industry, FareCompare chief executive Rick Seaney said.

"Until about three or four weeks ago, you saw almost continuous airfare sales," said Seaney. "Now the sales we do see are Tuesday, Wednesday, Saturday sales, off-peak sales instead of discount."

The increases also suggest some business travel is coming back, a welcome change for the airline industry, Seaney added. Fares have suffered sharply this year due in part to fewer passengers paying for business class seats, which cost between 2.5 to 3 times more than an economy class ticket.

"If there is another (fare increase) in a couple of weeks, we'll know for sure," Seaney said.

Sluggish consumer and corporate spending has forced airlines to lower fares to stimulate demand. The industry has also been hurt by oil prices, which have doubled since early February.

Major legacy carriers and low-cost carrier Southwest Airlines boosted fares on US flights two weeks ago for the first time this year.

On Thursday, data from the International Air Transport Association showed May passenger traffic slumped 9.3 percent. The improvement appeared to show the decline in traffic was leveling off, although not improving.

"We may have hit a bottom, but we are a long way from recovery," IATA CEO Giovanni Bisignani said in a statement.