This evening (Wednesday), in the 8pm EDT domestic airfare distribution, both Delta/Northwest and Continental simultaneously increased airfares on the bulk of their respective route systems by $10 roundtrip.
A quick check of both airlines’ hubs shows significant price structure changes with Continental deviating slightly with increases of $10 roundtrip on most routes and a smattering of hikes at the $6 and $4 roundtrip level.
If this hike sticks, it would be the 5th broad based airfare increase this year and the second in two weeks. Historically, the low cost airlines have not matched airfare hikes in back-to-back weeks, but we will keep an eye on them for possible matching activity - and note that both AirTran and Southwest have sales that were filed Monday and are set to expire tomorrow (Thursday).
At Wednesday’s Southwest Airlines media event, CEO Gary Kelly noted that Southwest will have a record load factor in October and that bookings were looking good for November and December - though he did voice concerns about oil prices cresting the $80 per barrel mark this week.
As for this latest airfare hike attempt - it should serve as a wakeup call for holiday procrastinators: the pendulum is swinging away from the consumer-friendly price points of the past year, and all who plan to fly during the holidays should be shopping now and buying holiday tickets promptly.
We will provide updates on any significant matching activity (or rollback activity) in the coming days.
Yesterday our proprietary airfare processing system detected an unusually large number of domestic U.S. city pairs with an increase of up to $16 roundtrip, a hike, initiated by American Airlines.
Continental and Southwest started matching late last night and hours ago Delta/Northwest, United and US Airways began matching — rounding out the legacy airlines
Most airfare hike attempts occur late in the week and either “stick” or “fizzle” over the weekend as carriers decide whether or not to match — it is unusual to see an airfare hike early in the week which is typically reserved for discounting and sales.
We contacted American Airlines about the airfare hike attempt and they confirmed the mileage based domestic airfare increase at the following levels:
- 0-450 miles - $3ow/$6rt
- 451-750 miles - $5ow/$10rt
- 751+ miles - $8ow/$16r
A spokesperson for Southwest Airlines further notes they have matched with at a lower level than the legacy airlines (with no increase on their cheapest “fun fares”): “Our advertised Fun Fares will not be increased. These
are modest increases varying by length of flight to help offset higher
fuel and other operating cost pressures. This is not a seasonal or
holiday fare increase, and we are not planning an increase for just
certain days of travel.” Here are how the Southwest increases break down:
- 0-450 miles - $2ow/$4rt
- 451-750 miles - $3ow/$6rt
- 751+ miles - $5ow/$10rt
This hike is layered on top a targeted peak holiday surcharge of $10 each way over the past two weeks and appears to be well on its way to “sticking” as the 4th increase of 2009 - all 4 occurring since June (compared to 15 total in 2008 and 17 in 2007).
Flying on peak travel dates (especially around the holidays) has been historically pricey. This year is no exception as airlines have recently showed us exactly which days they consider to be “special”.
FareCompare.com alerted consumers on September 24 that American Airlines initiated (with all legacy airlines matching in the following days) a “Peak Travel Surcharge” ($10 each-way) to a majority of routes for departures on three very specific days: Sunday after Thanksgiving (November 29) and for January 2 and 3.
Over the past few days the FareCompare.com proprietary airfare processing system noted several rule changes which show an additional ten days have been added with a $10 each way surcharge (13 total) as follows:
Peak Travel Surcharge Dates
- November 29 - November 30, 2009
- December 19, 2009
- December 26 - December 27, 2009
- January 2 - January 3, 2010
- March 14, 2010
- March 20 - March 21, 2010
- March 28, 2010
- April 11, 2010
- May 28, 2010
According to American Airlines, the carrier filed the surcharge on the initial three dates in late September, US Airways followed suit by filing the surcharge for six more dates, and then American added four additional departure dates, bringing the total to 13.
Most carriers have matched the Peak Travel Surcharge, so many travelers can expect to pay extra when flying for Thanksgiving, Christmas, Spring Break, and Memorial Day (see dates above).
FareCompare.com published its Holiday Travel 2009 Guide in mid September to help consumers find the cheapest days to travel around Thanksgiving and Christmas and continues to innovate with tools to ferret out the cheapest travel deals throughout the year on over 500 airlines worldwide.
Delta/Northwest and US Airways have now joined United Airlines in matching a
move initiated by American Airlines earlier this week that will add a $10
"miscellaneous" surcharge to three specific travel dates. Those dates
are Nov. 29, the Sunday after Thanksgiving, and Jan. 2 and 3.
All three dates are peak holiday travel days; the Sunday after Thanksgiving
competes with the Wednesday before the holiday for the title, "busiest air
travel day of the year".
The new, targeted surcharge brings sorely needed revenue to the airlines in the
current financial doldrums; at the same time, passengers traveling on the three
dates in question are already paying a premium price for their airfare and may
consider the additional $10 an inconsequential sum.
Last year, procrastinators were rewarded with lower fares during the holiday
period, but I do not expect that to happen this year. Below is a chart I
created to show holiday travelers the most/least
expensive days for traveling at Thanksgiving time.
On Thursday’s 8pm (EDT) airfare feed, United Airlines matched a move initiated by American Airlines on Wednesday. Both airlines are now adding a $10 surcharge to the vast majority of their fares for travel on the Sunday after Thanksgiving (Nov. 29) as well as for travel on Jan. 2 and 3.
The Sunday after Thanksgiving vies with the Wednesday before the holiday for busiest air travel day of the year; the two January dates are also heavily traveled days.
While we have contacted American and United Airlines to get their position on this new surcharge and will provide those responses when we receive them it seems clear that this move by the airlines represents an entirely new fee-setting opportunity.
Bottom line: Passengers already pay more to fly on certain days - typically, cheaper airfares are available on Tuesdays, Wednesdays and Saturdays - but American and United have now upped the ante, by determining that certain peak travel days are worth an additional passenger-paid “premium”.
The historically soft U.S. domestic air travel period starting with departures September just got its first jolt of stimulus with some targeted last minute Labor Day weekend sales initiated by United Airlines early Monday ( widely matched by most airlines) and Southwest firing out a fall/winter sale hours ago.
The Southwest sale includes travel through early January (the end of their current booking schedule) which is an unusually long travel window of 4 months - typically Southwest sales have had travel windows of 3 month or less. It does blackout the popular travel days of Friday and Sunday and tiptoes around peak Christmas and Thanksgiving travel.
I expect to see wide matching this evening and into early Wednesday of the Southwest sale making the next 24 hours a perfect buying window for consumers - whether looking for a quick getaway or locking in their Thanksgiving and Christmas plans.
The price of oil has been bouncing around the high $60’s to low $70’s per barrel recently which certainly has the airlines full attention as many consolidate their fall seat cuts and try to consolidate what appears to be the bottom in the demand curve that appears to have hit sometime in early June.
Ticket prices in general are up over the past 45 days but still compare favorably to last year at the same time when oil prices were still hovering $117 per barrel.
There have been several requests today to rundown the airfare hike from last week and I just spent about an hour reviewing this the U.S. domestic airfare distributions over the weekend and today.
In tracking over 50 airfare hike attempts in the past 3 years I have never come across a hike like this one.
Both Delta/Northwest and Southwest initiated hikes separately last Thursday night of $10 roundtrip ($5 one-way) and it appears that everyone other than Continental has mostly matched the Southwest overlapping routes, but none of the legacy airlines are participating in the much broader Delta/Northwest hike.
The reason this is odd is that typically this would force Delta/Northwest to rollback their non Southwest route hikes by the end of the day Monday, with the hike essentially fizzling - however at this point they haven’t rolled back, essentially leaving them on an island for the moment.
In the midst of the hike there are some off-peak sale airfares in the marketplace from AirTran and Southwest that further obscure the airfare landscape.
The bottom line is that we’ll need another day of activity to get a clearer picture on the final disposition of this third airfare hike attempt.
After reviewing the domestic airfare distributions from last night and this morning we note the following activity:
- Delta, Southwest, Alaska, Midwest, Frontier ($10 roundtrip [$5 oneway] increase bulk of route system)
- US Airways selective matching
- United Airlines dabbling in some limited matching
- American and Continental on the sidelines so far
The Southwest increase of 5 one-way was on mid/long haul routes and $2 one-way on short haul routes (outside of sale fares).
It is very difficult to get an exact read on this hike as there was some late week off-peak travel discounting that is mixed in with the increase activity.
Typically we will know if the hike attempt sticks by Monday afternoon.
It appears at this point that the hike has a very good chance of surviving - I have never seen an airfare hike in 4 years fail when Southwest Airlines was in the mix.
Tonight at 8pm EST Delta Air Lines (along with Northwest) initiated a domestic airfare hike of $10 roundtrip ($5 each way) across the bulk of its U.S. route system.
This domestic airfare hike marks the 3rd attempt in the past 6 weeks with the past 2 tries successfully sticking.
On yesterdays Q2 earnings call American Airlines CEO Gerard Arpey said he did some quick calculations on the back of an envelope and “figured that airlines needed about $17 more per one-way customer in the quarter to break even.”
If this domestic airfare increase sticks it would mean an increase of $20 to $25 each way domestically for the legacy airlines in the past 6 weeks. However this increase does not include international tickets nor the widely matched off-peak late summer/fall airfare domestic sale initiated by Southwest earlier this week.
Starting this past November through late May of this year airfare prices had been in a free fall, in June domestic airlines popped their chutes with a couple of airfare hikes — the big question is whether or not their is a hole in the canopy as demand in tough economic times is impossible to predict.
FareCompare.com has pulled the system-wide published airfares (normally a top subset for reporting this alert reporting) for the domestic U.S. and Canada from the 8:00pm EDT Wednesday June-20 airfare feed (evening before the increase) and the 8:00pm EDT Thursday 28-June (this evening) and compiled the following final report.
This report shows the percentage of markets that have a $5 one-way or more increase this evening as compared to Wednesday evening last week.
The breakdown is by Advance Purchase within airline. 7 days or less advance purchase is considered a business fare, more than 7 days advance purchase is considered leisure. Market is a city pair. Not all airlines file fares in each advance purchase category.
Final Airline Breakdown of 21-June Airfare Hike
