Southwest Adds $5 Each Way To Fare For Short Trips
DALLAS (CBSDFW.COM/AP) — Dallas-based Southwest Airlines Co. is raising fares on short routes by $10 per round trip, and other airlines are expected to match the increase.
The fare hike Friday applied to flights of less than 500 miles each way, or about one-third of Southwest’s routes.
“We never like to increase fares, but simply we needed to cover the cost of business,” said Southwest spokeswoman Ashley Dillon.
During the second quarter, which ended June 30, Southwest’s operating expenses rose 6 percent compared with the same period last year. Fuel, labor and maintenance costs all increased.
The company covered the higher expenses by boosting revenue nearly 12 percent, partly due to a 5 percent increase in the average fare, to $150 each way. Net income rose 42 percent, to $228 million.
Most U.S. airlines have continued making profits in 2012 despite the sluggish economy and historically high prices for jet fuel. They’ve been able to boost fares by holding down the number of flights and the supply of seats.
United Airlines and Delta Air Lines, the two biggest carriers, confirmed that they matched the Southwest increase. American said Friday afternoon that it had not raised prices. US Airways and JetBlue did not immediately return messages for comment.
Sometimes airlines roll back price increases when competitors don’t match them. That happened this week to Delta, which tried to raise prices on 3-day and 7-day advance-purchase tickets favored by business travelers.
The Southwest increase might prove more durable. Other airlines fly more miles, but Southwest carries more passengers within the U.S. than anyone, and it has great influence over prices.
Rick Seaney, CEO of FareCompare.com, said price increases supported by Southwest rarely collapse. “The opposite is normally the case,” he said, “as many hikes fail due to (Southwest’s) lack of participation.”
Seaney said he expected other airlines to match Southwest’s latest increase.
U.S. airlines have attempted eight broad fare increases this year, and four have succeeded.
(©2012 CBS Local Media, a division of CBS Radio Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
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