Northwest Airlines yesterday initiated two airfare hikes--including a $50 increase for virtually all one-way business fares--and replaced one-night minimum stays on many tickets with two-night minimums. A Continental Airlines spokesperson said the carrier matched Northwest across the board while sources suggested American and United also followed suit, though official comment was not available at press time from either carrier.
This latest fare hike follows several successful price increases earlier this year and one failed attempt last week
(BTNonline, June 7). Specifically, Northwest raised by $50 "fares impacted by the $499 each-way fare structure cap implemented by Delta in January
(BTNonline, Jan. 5)" and also posted $5-to-$10 increases on "all fares matching low-cost carriers."
"We need to increase the fares that customers are buying and will actually raise revenue," said Tim Griffin, Northwest executive vice president of marketing and distribution. "The prior increases have run their course and we need to be more targeted in our approach."
Northwest vice president of domestic pricing Jim Cron added that "Delta's $499 cap is artificial and has actually depressed fares, which otherwise would have been included in recent fare increase initiatives."
Terry Trippler, airline expert at Cheapseats, said Northwest's "bold and dramatic move" is something it has eyed for months. "Those business fares now are up to $549 each way and it will be interesting to see over the weekend if other airlines collapse on the $499 cap," he said. "My guess is that Delta will force everybody back down."
A Delta spokesperson at press time said that carrier is "currently studying Northwest's action."
At the same time, Northwest changed minimum-stay requirements from one night to two nights on many tickets, which Cron said would provide "valuable price segmentation which the fare structure currently lacks."
Trippler said he expected competitors to match the revised ticketing rules. "Now business travelers have to either stay another day or pay a higher walk-up fare," he said.
Should other carriers maintain the $499 cap on one-way business fares--and likely force Northwest to rescind its fare hike--but match the ticketing rule changes, Northwest could still declare victory. The airline followed a similar strategy last summer when the controversy around its proposed fee on bookings made through global distribution systems overshadowed new fees on reservations through call centers and airport locations, which ultimately were matched by most major carriers
(BTNonline, Aug. 24).
"When it comes to pricing and airfares, Northwest makes few mistakes," Trippler said.