A fare increase implemented by Delta Air Lines Thursday has stuck after Southwest Airlines joined other carriers Friday in bumping fares up.
“On late Thursday night, Delta Airlines initiated a new airfare hike,” FareCompare.com said. “The hike – up to $10 round-trip – is considered to be broad-based (covering the bulk of the airline’s route system). Southwest Airlines matched aggressively Friday afternoon. Both United Airlines and American Airlines matched Friday evening making it a very quick success.”
FareCompare said the latest fare hike came after nine unsuccessful attempts over the past six months.
“What this tells us is: 1. Ebola fears do not appear to be hurting demand for flights and the news about the end of the quarantine period for dozens of Texans with no new infections may continue to calm lingering fears. 2. Savings on jet fuel from recent oil price drops are not being passed along to passengers.”
J.P Morgan airline analyst Jamie Baker also took note that the increase came despite dropping prices for oil and jet fuel.
“This represents the industry’s first successful system-wide domestic fare increase since April, and comes in spite of fuel’s recent, precipitous decline,” Baker wrote in a Monday note. “Evidence of domestic fare traction can hopefully allay investor concerns that lower fuel prices will simply be handed over to passengers in the form of lower fares.”
Gulf Coast spot prices for jet fuel were $2.42 a gallon Tuesday, Oct. 14, the last day for which the Energy Information Administration has prices posted. The spot price was $2.91 a year earlier. As recently as Sept. 8, the spot price was at $2.80.
Airline shares were up nicely higher Monday. As of about 2:10 p.m. CDT, American Airlines Group was up $1.69, or 5.1 percent to $35,07; Delta climbed $1.65, or 4.8 percent, to $36.04; United Continental jumped $2.75, or 6.2 percent , to $47.43; and Southwest Airlines was up $1.70, or 5.5 percent , to $32.75.
In an unrelated but related note, Expedia said Monday that holiday travel will be more expensive in 2014 than in 2013.
“Domestic Thanksgiving flight fares are up 17 percent percent , averaging $467 this year versus $400 in 2013,” Expedia said. “Christmas flights are also more expensive than the year prior, but the fare rise is more modest. Flights over Christmas averaged $482 in 2013 and are averaging $493 in 2014, a 2 percent hike.”