5 US airlines hike base fares
By Staff Writer
Indicating the major increase since June 2015, several airlines in the US have raised base fares for roundtrip by $6. Delta Airlines, Southwest Airlines, American Airlines, United Airlines and Virgin America are among those that raised fare. The hike is effective for corporate, leisure and discounted fares. Airlines' operational profits set to rise on lower fuel costs.
JPMorgan Chase & Co has carried out a study on base fare rise by several US airlines. Delta Airlines was the first airline to increase the base fare rise. Jamie Baker said that the base fare rise started by Delta and other airlines including American, United, JetBlue and Virgin America followed the suit.
ABC NEWS reports that the increase could be rolled back. But, how many airlines will agree to reduce the increased base fare, questions Baker. However, reducing the base fare rise impact, airlines will run sales and tinker with prices.
The US airlines are getting a windfall from the prevailing low fuel prices. JetBlue Airways hiked round trip fare by $4 on limited routes. Delta Airlines has picked up and increased base fare, says Rick Seaney, CEO, FareCompare.com.
The base fare hike got a major boost from Southwest, which increased base fare a day later, reports Travel Agent Central. Southwest Airlines is the leading US domestic airline as it carries the most domestic passengers. However, higher base fare is not necessarily keeping burden on passengers.
Airlines run frequent sales offers and they do adjust fares on individual flights depending on demand. Airlines hiked majorly in April 2015. The hike in airfare indicated that there was no impact of Ebola on travel demand. Airlines didn't pass the savings from lower fuel prices, observes Seaney.
US airlines, with view to offset rising labor costs, have taken decision to hike base fare. The increase in base fare is resulting in ire of passengers. The base fare hike comes at a juncture when the US aviation industry is under investigation for artificial collusion, reports Reuters. The US Justice Department is investigating whether there's a conspiracy to limit flights and keep fares high.
The passengers have no other options as five airlines, which hiked base fare, control 80 percent of the aviation travel in the US. After the four major mergers in the US aviation industry, the five airlines hold the control over the industry. The base fare hike doesn't impact business travel. Airlines will get a boost even if leisure travel decreases.
Oil price is the major part of the cost of aircraft maintenance. Oil price fell one-fifth since April 2015. Fuel is the major expenditure for airlines. After the base fare hike, airlines are performing better on the Wall Street. American Airlines, United Continental and Southwest Airlines shares rose over five percent. Delta Airlines' stock was up 4.8 percent. JetBlue Airways Corp rose 3.4 percent.