Today Northwest Airlines, the last holdout of the legacy airlines, matched the
$10 to $50 airfare hike initiated by United Airlines on March 13, 2008.
"Of
the seven airfare hikes by the major legacy airlines this is one of the biggest
airfare increases since December 18, 2007 especially on routes of over 1000 air
miles one-way," says Tom Parsons, CEO and Founder of Bestfares.com, an
internet travel website that tracks airfare changes and travel industry trends.
On
the evening of March 13, 2008, United Airlines raised both leisure and
business domestic airfares by $10 roundtrip on flights up to 500 air miles, $20
on flights 501 to 1000 air miles, $30 on flights 1001 to 1500 air miles, and a
whopping $50 roundtrip on domestic flights over 1,500 air miles one-way.
On March 14, 2008 Continental Airlines was the first legacy airlines to match
these airfares. On March 15, 2008 American Airlines, Delta Airlines and US
Airways jumped onboard and today March 16, 2008 Northwest Airlines matched the
United Airlines airfare increase.
"This
new airfare hike, especially on domestic routes over 1500 miles, will be the
heftiest airfare increase we've seen in years. This $50 airfare hike
represents a 250% increase over any of the previous six fare hikes that have
occurred since December 18, 2007," states Parsons.
These
higher airfares will primarily affect leisure and business travelers who travel
between two non competitive routes were the six major legacy airlines do not
have to compete with any of the low cost airlines such as Southwest Airlines,
AirTran, JetBlue, Spirit and Virgin America.
"Business
and leisure travelers on non competitive routes had already faced the highest
cost per mile before this fare hike. When you include these new airfare
hikes up to $50 roundtrip, business and leisure travelers now face airfares that
are as much as $120 to $140 higher than they did on December 18, 2007.
Since January 2005 leisure travelers who have to travel between two non
competitive markets now pay almost double what they paid just three short
years ago," adds Parsons.
Business travelers have probably seen the biggest increase in the past three years.
The average coast to coast airfare was $499 one-way or $998 roundtrip in January
2005. Now business travelers pay as much as $977 one-way or $1954
roundtrip. That is an increase in just three years of almost $1000 more
roundtrip. Leisure travelers in January 2005 found their average coast to
coast airfare in the $348 range. Today it’s not uncommon, especially in
non competitive markets, to find these airfares more than double.
The
sad news for these travelers is as long as the cost of a barrel of oil continues
to stay at the $110 mark or higher these travelers should expect to see even
more airfare hikes in the very near future. This is the 4th
consecutive week that major airlines have successfully raised airfares.
If
there is any good news for travelers, America now has many routes served by the
low cost carriers. Due to the competitive nature of the airline industry
in most instances, the major airlines are forced to offer lower competitive
airfares on these routes. "When comparing airfares in nearby
competitive markets that are serviced by low cost carriers and comparing nearby
alternative airports to non competitive markets some airfares can be better than
half price," states Parsons. For example, Dallas to Key West, Florida
is selling for $636 roundtrip. This is a route with no low-fare airline
competitors. Fly from Dallas to Miami, a market where there are low-fare
airlines and the airfare drops to $238 roundtrip. That’s almost a $400
difference. A family of four would save almost $1600 for a 125 mile ride
by car. Forget the car, for that kind of savings get me a limo.
Listed
below are the airfare hikes and fuel surcharge increases the major airlines have
made since December 18, 2007.
(1) Week
of December 20, 2007: Major airlines raise fuel surcharges on leisure and
Business Class fares from $10 roundtrip to $20 roundtrip. Total increase
since December 18, 2007, $10 roundtrip.
(2) Week
of January 7, 2008: Major airlines raise leisure and Business Class
airfares by $10 roundtrip. Fuel surcharges still remain at $20 roundtrip.
Total increase since December 18, 2007, $20 roundtrip.
(3)
Weekend of January 24, 2008: Major airlines double fuel surcharges on
leisure and Business Class airfares from $20 to $40 roundtrip. Total
increase since December 18, 2007, $40 roundtrip.
(4)
Weekend of February 22, 2008: Major airlines raise airfares on both
leisure and Business Class airfares $10 roundtrip. $40 fuel surcharge
still in place. Total increase since December 18, 2007, $50 roundtrip.
(5) Weekend
of February 29, 2008: Major airlines raise leisure and Business Class
airfares $10 roundtrip. Total increase since December 18, 2007, $60
roundtrip.
(6) Weekend
of March 7, 2008: Major airlines raise fuel surcharges from $40 to $50
roundtrip. Total airfare increase with airfare hikes and fuel surcharges
since December 18, 2007, $70 roundtrip.
(7)
March 14, 2008: United & Continental Airlines raised both leisure and
business domestic airfares by $10 roundtrip on flights up to 500 air miles, $20
on flights 501 to 1000 air miles, $30 on flights 1001 to 1500 air miles, and a
whopping $50 roundtrip on domestic flights over 1,500 air miles one-way.
On March 15, 2008 American Airlines, Delta Airlines and US Airways matched the
new fare hike. March 16, 2008 Northwest, the final hold out of the legacy
airlines, matched United Airlines airfare increases.
"Now
that the price of crude oil has gone as high as $111 per barrel this week, we do
expect the airlines to pass this higher fuel cost on to the traveling
public," states Parsons. "If there is any fact here, air travelers
will be paying much more than they did last summer, especially in markets where
the legacy airlines do not have to compete with low-cost carriers such as
Southwest Airlines, JetBlue, Spirit, Virgin America and Frontier."
As
fuel prices continue to rise, non-competitive markets will continue to take
the brunt of future airfare and fuel surcharge hikes. The biggest opportunities for
low-cost travel are to those travelers who have the option of
flying on low cost carriers, or on those routes where the legacy carriers have
to match those fares to remain competitive. Those travelers still have
the "Freedom To Fly" for less, for example, coast to coast for as
little as $198 roundtrip.
"For
those who are planning travel for the upcoming busy summer travel season, the
airlines are going to have to keep addressing the reality of higher and higher
fuel prices and the general public is going to have to face the fact
that they are going to have to
spend more if they want to continue to travel by air,"
adds Parsons. Parsons also strongly suggests that if you are planning to
travel between the busy summer period June through Labor Day you better start
searching now and not later.
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