US Airlines Raise Fares By USD$2 On Average

October 21, 2014

Bookmark and Share

Major US airlines have raised domestic one-way fares by USD2 on average since Thursday, marking the first industry wide increase in half a year.

The increases suggest that airlines do not intend to pass along savings from the decline in jet fuel prices to their customers. The news may quell concern that airline revenue will fall if the Ebola virus discourages travel.

On Thursday afternoon, JetBlue Airways raised fares USD$2 across its entire domestic network and Puerto Rico, according to spokesman Morgan Johnston.

Delta followed with a similar increase that night, and on Friday, Southwest Airlines, United and American all followed suit, according to each airline.

"We matched an industry increase and expanded it to additional markets," a Delta spokesman said.

Several outlets misreported that Delta initiated the increases, although its involvement likely triggered the reaction from competitors.

"Look no further than today's domestic fares structure for supporting evidence of our view that shareholders are the disproportionate beneficiaries of lower jet fuel prices," JPMorgan analyst Jamie Baker wrote in a research note Monday.

Baker said airlines' revenue per available seat mile may still fall with a slump in global economic demand, which has contributed to the slide in crude oil prices.

"That's different than airlines reaching a conscious decision to hand over savings directly to passengers," he wrote.

Delta, American and United have said that macroeconomic concerns such as Ebola have not impacted their bookings.