United Airlines today increased the fuel surcharge on most passenger tickets $5 each way to $15 just days after a Continental Airlines-led fare hike collapsed. The increase is effective immediately. A more modest fare increase led by Southwest Airlines earlier this week has held.
John Tague, United executive vice president of marketing, sales and revenue, said the airline is "making every reasonable effort to mitigate today's challenging fuel environment." United had been one of the airlines matching Continental's larger price hike from late last week
(BTN, May 19).
The higher surcharge applies to first, business, unrestricted economy and "some" discounted economy classes. It also has been added "to all negotiated fares where the surcharge exists, for example, cruise and corporate fixed fares." United said it also applied the full $15 fuel surcharge to negotiated fares previously excluded from such extra costs, including wholesale and meetings fares.
For several months, major carriers generally have tried to raise fares or specifically pass rising fuel costs to passengers. Such efforts have prompted some major airlines to fully or partially match but within a few days routinely they have failed to gain sufficient support around the industry. To stay competitive with those airlines refusing to fully match, including low-cost carriers that rarely follow major carrier pricing actions, carriers leading the initiative have rescinded the price hikes. The fate of today's fuel surcharge hike from United likely will be known in a day or two.
In another sign of the difficult times faced by airlines, Southwest Airlines this week for the first time since late 2000 raised most of its fares. The increase tacked $1 to each flight segment under 600 miles and $2 to those over 600 miles. Most airlines competing on Southwest routes matched the modest hike.
In other airfare news, the U.S. Department of Transportation's Bureau of Transportation Statistics today said the Air Travel Price Index rose 1.5 percent in the last quarter of 2003, compared with one year earlier. Figures released today were 0.8 percent above last year's third quarter and 3.4 percent above the fourth quarter of 2001. ATPI measures airfare changes against a baseline of first-quarter 1995 figures using fares paid by travelers.
Markets with the greatest fourth-quarter fare increases, according to ATPI measurements and excluding Hawaii, included Charlotte (9.9 percent), Columbus, Ohio, (9.8 percent) and Manchester, N.H., (8.2 percent). Milwaukee and Atlanta experienced the largest declines, 6.2 percent and 5.5 percent, respectively.