Consumer

Rising Fuel Prices Blamed For Latest Airfare Hike

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LOS ANGELES (CBS/AP) — Travelers face another round of airline fare increases along with a series of new fees that some say could derail any long-term recovery for the U.S. travel industry.

American Airlines is raising U.S. base fares $10 per round trip. If the increase sticks, it would be the seventh broad price hike this year by U.S. airlines, which say they need more revenue to offset rising fuel prices.

American Airlines spokesman Tim Smith confirmed that his airline raised prices Wednesday night. Delta said it was studying the move but had not matched American yet.

Two low-cost carriers, JetBlue Airways and AirTran Airways, said they had not raised prices. United, Continental and Southwest did not immediately comment on their plans.

American’s latest fare increase also extended to Hawaii and Canada, where round-trip tickets rose by up to $21.

CBS News travel editor Peter Greenberg tells KNX 1070 the major carriers are getting increasingly creative at justifying their fare increases.

Airlines are also boosting fees.

In the last two weeks, JetBlue raised the charge for checking a second bag to $35 from $30, and American upped the cost of making a flight reservation by phone to $25 from $20.

The Consumer Travel Alliance said Thursday that passengers paid U.S. airlines more than $9.2 billion in fees last year — an average of $36.80 per round trip — and many of the charges weren’t disclosed to passengers when they bought their tickets.

The frequent fare increases so far in 2011 are reminiscent of 2008, when airlines pushed through many price hikes to keep up with skyrocketing fuel costs.

Rick Seaney, CEO of travel website FareCompare.com, said if the pattern of 2008 holds, the airlines may attempt weekly raises through the end of April.

In most cases this year, the five so-called network airlines — United, Continental, Delta, American and US Airways — have quickly matched each other’s price increases. The low-cost airlines have sometimes balked, which forces the network airlines to scale back prices on routes where they compete with Southwest or other
low-cost airlines.

Southwest CEO Gary Kelly said this week that fare increases aren’t keeping up with fuel prices, and he’s not afraid that higher fares will drive passengers away. He noted that even after several fare hikes, Southwest’s February traffic rose 13 percent over the same month last year.

Kelly said Southwest is on pace to spend $1.3 billion more on fuel than in 2010, when its bill came to $3.6 billion. That was 33 percent of all costs, just behind labor as Southwest’s top expense.

(TM and © Copyright 2010 CBS Local Media, a division of CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2010 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
APTV-03-10-11 0852PST

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