Airlines roll back weekend fare increase
NEW YORK » A number of major airlines rolled back a weekend fare increase yesterday, the first time in more than half a dozen attempts that a widespread price hike failed to take hold across the struggling industry.
Hawaiian Airlines, which last week increased its fuel surcharge between Hawaii and the mainland by $20 each way, said yesterday the move by the other airlines was "under review" and that Hawaiian had not made a decision.
Carriers declined to say whether the shift signaled concerns about falling customer demand. Still, the decision served as a reminder that passengers -- many reeling from financial worries of their own -- may be nearing a tipping point in terms of how much they will pay to fly.
"This could be the first sign that demand is softening," said Graeme Wallace, chief technology officer of airfare research site FareCompare.com. "Up until now, the (airlines') statements have been that they expect demand to stay high."
AMR Corp.'s American Airlines launched the $20 roundtrip increases across much of its domestic network Saturday. That move was quickly matched by many of its closest competitors, including UAL Corp.'s United Airlines and Delta Air Lines Inc.
Continental Airlines Inc. was among the carriers that matched the increase over the weekend, but it rolled back the higher prices yesterday morning, putting pressure on other carriers to do the same.
Spokeswoman Julie King said the Houston carrier rescinded the increase "for competitive reasons."
Carriers are prohibited from collectively agreeing to raise or lower fares, but nothing stops them from following a rival's lead. As a result, most major airlines tend to jockey for position when filing fares to a central booking system, which is updated three times daily.
Airlines have been scrambling to cut costs and increase revenue as jet fuel prices have soared 77 percent in the past year.
A number of airlines recently laid out sweeping plans to cut jobs, slash flights and ground dozens of less efficient planes. Carriers hope they can push fares even higher by reducing the number of available seats in the air.
The industry has been generally successful in raising prices and fuel surcharges in recent months, with 12 out of 17 increases have taken hold since the start of the year.