Major airlines in the US roll back fare hike

Wednesday, June 11, 2008, 10:38 by Aviation Correspondent

American Airlines, United, Continental, Delta and US Airways reduce fares

Many major airlines have reduced the fares which were raised on June 9, 2008.

These include American Airlines, United Airlines, Continental Airlines, Delta Air Lines, and US Airways – all of which reduced fares on thousands of flights.

They had raised prices by about $20 over the weekend, in an effort to offset soaring prices of aviation fuel.

The decision to roll back fares, according to media reports, could have arisen from concerns that widespread increases in prices are putting off passengers.

An analyst at the airfare research website FareCompare.com was quoted as commenting on the rollback in air fares: “This could be the first sign that demand is softening. Up until now, the airlines’ statements have been that they expect demand to stay high.”

American Airlines, the world’s largest airline and a subsidiary of AMR Corporation, had increased $20 roundtrip across much of its domestic network. UAL Corporation’s United Airlines and Delta Air Lines had followed suit.

American Airlines had, in May 2008, announced charging some fliers $15 to check the first bag, to be followed by raising a number of other charges. Its new baggage charge is scheduled to take effect on tickets bought on or after June 15, 2008.

Continental Airlines, based in Houston, Texas, the United States, and the fourth-largest airline in the United States based on revenue passenger miles, had also hiked fares a week ago, only to roll them back on June 9.

A spokesman for Continental Airlines – which operates flights to destinations throughout the United States, Canada, Latin America, Europe, and the Asia-Pacific regions – was quoted as saying that “the carrier rescinded the increase for competitive reasons.”

While airlines are prohibited from collectively agreeing to raise or lower fares, no airline is not prevented from following another airline’s lead.

The website FareCompare.com said 12 out of 17 fare increases have taken hold since the start of 2008, with 6 of the successful increases occurring in the last two months.

Budget airlines such as Southwest Airlines, based in Dallas, typically do not participate in broad price increases, according to the website.

The Air Transport Association, the trade organisation representing the principle airlines in the United States, says that, despite the gradual increase in prices, higher fares “have not come close to compensating airlines for the increased cost of fuel.”

The airlines are expected to pay $20 billion more in 2008 than they did in the year before for jet fuel, according to the Air Transport Association.