After years of financial difficulties, major airlines were finally flush with cash in 2010, and 2011 is shaping up to continue its path to profitability for the industry.
Earlier this week Delta Air Lines and United Airlines increased fares on flights within the United States.
Delta raised prices on roundtrip domestic tickets by as much as $20, and United increased its prices by $10 roundtrip, according to an announcement sent out by Rick Seaney, chief executive officers of the site FareCompare.com. Airfare for shorter flights did not see a significant price hike as compared to longer flights.
Competing airlines will usually respond to fare hikes within a day and a half, and if most of a carrier’s competitors do not match its rate hike, the initiating carrier eventually backs down.
Seaney said in an e-mail late Monday that he had seen a large amount of price matching going on among airlines.
“Continental and US Airways matched the United Airlines version of the hike ($4 to $10 roundtrip), while American matched both United and Delta ($10 to $20 roundtrip),” Seaney wrote. “Southwest matched Delta in a relatively small number of markets.”
According to FareCompare, this is the fourth time airlines have tried to increase fares since mid-December and the second time since January 1.
On Tuesday, Delta reported fourth-quarter profits of $19 million and over $300 million in profit-sharing expenses. Expenses could increase by as much as $1 billion for fuel this year if oil prices do not eventually fall.
Richard Anderson, Delta’s chief executive officer said, “These results are a direct reflection of the success of our merger, cost discipline and debt reduction strategy and give us momentum to deal with the rising fuel prices we face in 2011.”
“Industry-wide fare increases, combined with growth in Delta’s ancillary products and services, will provide a more long-term, revenue-based solution to addressing the high fuel environment,” added Ed Bastian, Delta’s president.
High fuel prices going back to 2008 meant many airlines began cutting back on the number of flights they offered. Since then, they have been slow to expand.What people are talking about.Story about delta airlines profit 2008.