Northwest Airlines yesterday again raised a majority of all North American fares, a company spokesman confirmed. The price increase was matched by American, America West, ATA, Delta, Independence, Midwest and US Airways, with AirTran, Continental and United expected to follow suit, according to J.P. Morgan Securities analyst Jamie Baker. "Southwest and JetBlue fares excluded," Baker noted, "consistent with non-participation in a similar increase two weeks ago."
Specifically, Northwest raised by $5 one-way fares for flights under 1,000 miles and raised by $10 one-way fares for longer flights. Exclusions included high-end business and leisure fares and those competitive with low-cost carriers. Northwest initiated a similar increase last month
(BTN, March 7). In both cases, it cited increases in the cost of jet fuel
(BTNonline, March 10).
Baker said the latest price hike is "not enough to negate $55 oil, though it is encouraging nonetheless, given the industry's otherwise uninspiring track record at boosting revenue."
Another successful fare hike is welcome news for major carriers expecting recently reformed industry pricing to erode revenues. Continental Airlines, for example, this week said its annual revenues would decline by $200 million. "Our experience to date as a result of Delta's fare reduction has demonstrated the fare reductions are not being sufficiently offset by increases in passenger traffic so as to make them revenue-positive," the carrier said in a Securities & Exchange Commission filing. It noted that the $200 million estimate "exceeds the high end of our previous estimate of the negative impact to our annual revenue by approximately $50 million."