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TravelHaven News Brief – U.S. Airlines raise fares twice in two weeks

A Reuters article suggests that recent air fare hikes signal stabilization in ticket prices, quoting FareCompare.com, a site that compares prices for flights. American Airlines hiked prices between $5 and $10 for a one-way ticket for a large number of its U.S. routes on Wednesday. Later that day, United Airlines matched those increases on many of its own U.S. flights.

In recent weeks, the pace of discounting has slowed and there are signs of stabilization. Major legacy carriers, as well as low-cost carrier Southwest Airlines, boosted fares on U.S. flights two weeks ago for the first time this year. On Thursday, data from the International Air Transport Association showed May passenger traffic slumped 9.3 percent. The improvement appeared to show the decline in traffic was leveling off, although not improving.

The increases are an attempt by airlines to lift prices ahead of the summer season, typically a strong period for the airline industry. "Until about three or four weeks ago, you saw almost continuous airfare sales," said Rick Seaney. "Now the sales we do see are Tuesday, Wednesday, Saturday sales, off-peak sales instead of discount. The increases also suggest some business travel is coming back, a welcome change for the airline industry. If there is another (fare hike) in a couple of weeks, we’ll know for sure.”

Fares have suffered sharply this year due in part to fewer travelers paying for business-class seats, which cost between 2.5 to 3 times more than a coach-class ticket. Sluggish consumer and corporate spending has forced airlines to drop fares to stimulate demand. The industry has also been hurt by oil prices, which have doubled since early February.