Airfare Hike Sticking

An airfare price hike initiated late last week by American Airlines has a good chance of sticking now that traditional spoiler Northwest Airlines today confirmed it matched the $5 increase on all one-way domestic flights. Also matched by Continental, Delta, United and US Airways, the fare increase--set to take effect June 1--is the industry's response to a government suspension of security fees, according to J.P. Morgan Securities analyst Jamie Baker.

"For those that have bemoaned the industry's apparent lack of pricing power, today is your day," Baker said. "We expect the more significant test to occur in October, when the security fees are once again implemented and carriers are once again faced with either rolling back their increase in base fares or testing consumers' willingness to pay more out of pocket."