American Airlines this week led the latest round of fare increases—this time on all domestic routes, which saw roundtrip spikes of $10 on low-bucket fares. Continental Airlines, Delta Air Lines, Northwest Airlines, United Airlines and US Airways matched American in the latest round of hikes attributed largely to fuel costs.
"That was a domestic increase across all of our fares," AMR chairman and CEO Gerard Arpey said yesterday during the carrier's first-quarter earnings call.
As the primary catalyst, carriers once again are citing surging fuel costs, which in the past weeks also had spurred a round of high-end fare increases
(BTNonline, April 6) as well as newly initiated fuel surcharges on international long-haul routes
(BTNonline, April 12).
Tom Parsons, CEO of discount travel site and airfare monitor Bestfares.com, in a statement today said the fare increase on leisure fares is the fifth of the year. "Add that to the 12 hikes that occurred in 2005, and this makes a grand total of 17 airfare hikes since January of 2005 on American routes not served by low-cost airlines like Southwest, Jet Blue, Spirit and AirTran," said Parsons. Yet, even low-cost carriers have been raising prices. Southwest and JetBlue this year led increases
(BTN, April 3) and Spirit today raised most fares by $5 to $20 each way in domestic markets as well as the Bahamas, Mexico and the Caribbean.
Crude oil for May delivery rose to more than $72 a barrel, according to the New York Mercantile Exchange. Continental president Jeff Smisek today during the carrier's first-quarter earnings call noted that in addition to the base cost of oil, the crack spread—representing the cost of refinement for jet fuel—also has been moving upward.
AMR's Arpey yesterday told investors during the company's earnings call that carriers—particularly his own—are becoming more aggressive in passing fuel costs onto customers as a means of survival. "Ultimately, the consumer has to pay for this," he said. "This industry, just like every other industry that is dependent on oil, has to turn around and pass this cost onto the customers or else there won't be an industry. We haven't done a good job in the past couple of years of taking this cost from the oil industry and passing it onto the airline customers. We're doing a little better job this year, but ultimately airline passengers are going to have to pay this. Otherwise, there won't be airplanes flying around."
Meanwhile, British Airways tomorrow will raise its fuel surcharge on long-haul flights by £5 (US$9) to £35 ($62), the carrier said. "Our annual fuel bill for 2005/2006 is expected to be £1.6 billion ($2.8 billion)," said commerical director Martin George. "We estimated previously that this would rise by £400 million in 2006/2007 ($710 million) but, at these prices, we would now expect this year's fuel bill to be £600 million ($1.07 billion) higher at £2.2 billion ($3.9 billion)."