29 April 2008

Airline fare news: continuing upward spiral

Gas-price-conscious travelers are not the only ones bearing the burden of higher prices. Look to the skies as well.

Delta Air Lines Inc., the nation's third-largest carrier, said this week it raised domestic fares in most cases $10 to $40 per roundtrip, in the form of a fuel surcharge.

The latest hike covers the bulk of Atlanta-based Delta's route system, according to Rick Seaney of airline ticket researcher FareCompare.com.

Northwest Airlines Corp. is also studying the Delta-initiated fare hike, a spokesman said.

Tempe, Ariz.-based US Airways Group Inc. is another airline studying the Delta move.

Airlines have been hiking fares in recent months to deal with soaring fuel prices, spurred by oil, which currently stands at nearly $120 a barrel.

Some fare increases have stuck, while others have not. This has been a perennial airline problem in the past with many increases being rejected later.

Northwest Airlines said it would match fare increases instituted by other carriers, matching the approximately 3-5% increase first implemented by United Airlines and matched by Delta Air Lines, American Airlines, Continental Airlines.

"We are making this move to offset the extraordinarily high cost of fuel," said Jim Cron, senior vice president of revenue management.

Northwest Airlines lost $4.1 billion in the first quarter, according to a recent earnings report.

Earlier this month the airline announced a plan to mitigate the dramatic fuel cost increases. The plan included revenue enhancements from:

Ã~· Increased fees, fares and fuel surcharges

Ã~· Domestic capacity reductions of 5%

Ã~· A fleet reduction of 15 to 20 aircraft

Ã~· An estimated $100 million reduction in non-aircraft capital expenditures

Ã~· And a $100 million improvement to the airline's bottom line, profit and loss statement, that will be achieved through other cost reductions, productivity improvements and revenue enhancements, said the carrier.

Report by David Wilkening