Reacting to the rapid rise in oil prices in the past three weeks, U.S. airlines responded on Monday with another round of surcharges to prop up their dwindling profits.
As oil nears $107 a barrel, largely due to unrest in the Middle East, the airlines—both legacy and budget—added fuel surcharges to many domestic and international routes.
Budget airline JetBlue Airways, for example, added a $45 one-way surcharge to its flights to the Caribbean.
Delta Air Lines added $20 round-trip surcharge to all its flights, but most airlines, including legacy carrier American Airlines, decided upon a $10 increase round-trip.
Even low-cost stalwarts, like Southwest Airlines, have been swept into the wave of increases. Southwest added another $10 surcharge to the price of most of its domestic round-trip airfares on Monday.
Southwest said that the increase was necessary in order to counter high fuel prices.
As the U.S. airline that carries the most passengers, Southwest has a significant sway on the price of airfare. The budget carrier’s fare increases this week strengthened the position of the industry-wide price increases.
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Many airlines originally had opted against fare increases in markets where Southwest competes. With Southwest joining the fray, however, those fares have gone up.
This is the sixth time this year that the airlines have raised their fares as jet fuel prices doubled to more than $3 a gallon.
In 2010, there were only four industry-wide price increases half of which occurred in December. The rapid rise in fuel prices and fares mirrors conditions in 2008, when oil also went to $100 a barrel.
The rise in airfare for now is being supported by a strong thirst for travel and an improving economy. However, airline analysts wonder how long increases can go before they star cooling demand.
After a certain point, passenger may bypass non-essential travel if the price is too high, analysts say. High airfares might dissuade travelers as the peak travel season nears.
For now, the airlines continue to cut capacity in order to keep pace with falling demand. Frontier Airlines, American Airlines and Delta all announced within the last week that they would either cut capacity or keep capacity static.
By Adriana Padilla for PeterGreenberg.com.
Related Links: Reuters, USA Today
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