After the Storm, Airlines Hike Ticket Prices

Dec. 30, 2010— -- After a week of blizzard-related delays that left tens of thousands of passengers stranded -- many who now won't make it home until the new year -- the largest airlines are now raising airfares.

This fare hike comes as passengers are sleeping on airport floors and waiting hours to get through to customer service representatives on clogged phone lines.

"You would have thought they would have waited until the mess in the Northeast cleared up. But that's not the way the airlines' revenue management departments work," explained Graeme Wallace, chief technology officer for FareCompare.com, which first announced the hike. "They've been tasked to make as money as they can. They see an opportunity and are going with it."

The $20 roundtrip airfare hike was initiated by American Airlines on Monday, according to FareCompare, and has now been matched by United, Continental, Delta, US Airways and Alaska Airlines. Southwest, Jet Blue, Airtran and Frontier have not yet raised their prices.

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Airlines believe they can increase fares given the basic rules of supply and demand. During the recession, they cut flights to adjust to fewer businessmen and vacationers taking to the skies. Now those travelers are coming back, but there are still fewer seats available, allowing the airlines to command higher prices.

Wallace speculated that American might have initiated the price hike to recoup losses -- real or perceived -- from its battle with booking sites Expedia and Orbitz or in reaction to rising oil prices.