Airlines hike fares in time for holiday travel, so book now
— -- Looks like airfares are rising again, just in time for holiday travel.
Discount carrier Southwest and its subsidiary AirTran matched a fare increase Wednesday that was launched by larger airlines, likely ensuring that the industry's latest attempt to raise ticket prices will be successful.
Delta Air Lines on Tuesday announced an increase of $4 to $10 in ticket prices for one-way trips across much of the USA, with United Continental following. Southwest and AirTran matched it by raising $2 to $5 one-way on nearly all domestic fares, says Jamie Baker, an airline analyst at JPMorgan.
Other carriers, including Alaska Airlines, JetBlue, Frontier and Virgin America, have also matched.
Fare increases don't always stick because some airlines balk and carriers don't like to price themselves too high against competitors. But Southwest's match is a pretty good sign it'll cost more to fly.
Baker estimates U.S. airlines have attempted to raise fares 19 times this year, and have succeeded in 10 previous attempts.
The increase comes as consumers and corporate travel planners show signs of skittishness amid global economic uncertainties. But airlines are in a better position to raise fares because they've cut flights or the seats they make available aggressively so their planes fly close to full. With the cuts, analysts expect airlines to continue raising prices to post a profit.
"This attempt occurs as most U.S. airlines are set to announce third-quarter profits amidst the backdrop of choppy economic headlines and stubbornly high jet fuel prices," writes Rick Seaney, CEO of fare monitor site FareCompare.com, in an e-mail.
Baker of JPMorgan says the latest attempt also underscores the carriers' newfound confidence that travel will rebound in coming weeks. "We view the uncharacteristically rapid success of this latest effort (under 24 hours) as a precursor to bullish commentary in the near term," he says in his report.
Passengers should move to book flights before fares go higher, Seaney advises. "This hike attempt should increase the urgency of procrastinators to lock in Thanksgiving and Christmas quickly," he says.
The increase coincides with an industrywide sale kicked off by Southwest on Tuesday, though the discounts have blackout dates and don't apply to peak travel days around Thanksgiving and Christmas. United Continental, Virgin America, Delta and JetBlue matched the Southwest sales, and all end Thursday.
