US Airlines Raise Fares As Travel Picture Stabilizes
June 25 2009 - 11:31AM
Dow Jones News
Two major U.S. airlines last night raised fares across parts of
their domestic networks, the second hike in as many weeks amid
signs that the travel market is stabilizing.
American Airlines, a unit of AMR Corp. (AMR) and UAL Corp.'s
(UAUA) United Airlines added $10 and $20 to roundtrip fares, on top
of a similar industry-wide increase two weeks ago.
The increases came as the International Air Transport
Association said Thursday that passenger demand in May fell 9.2%
from the previous year, down from a 3.1% decline in April, but
better than the 11.1% year-over-year drop in March.
Results reflect not only the global recession but fears this
spring over the spread of the A/H1N1 influenza virus. In Mexico,
the country hardest-hit by the flu, carriers saw air traffic fall
by about 40% in May.
While U.S. airlines responded quickly by cutting seat capacity
to match falling demand, they've joined world airlines in reporting
sharp revenue declines. "We may have hit bottom, but we are a long
way from recovery," said Giovanni Bisignani, head of IATA, the
airlines' world trade group. "After a 20% fall in international
passenger revenue in the first quarter, we estimate the drop
accelerated to as much as 30% in May. This crisis is the worst we
have ever seen."
Already weak from the global financial downturn, air traffic has
taken a sharp hit from fears that the virus was spreading from
Mexico to the rest of the world.
Delta Air Lines Inc. (DAL) the world's largest airline, said
this week that worries over the virus, also known as swine flu,
would cut second-quarter revenue by $250 million, as the airline
slashed service to Mexico, Latin America and Asia. Delta said it
expects to restore some of that capacity during the remainder of
2009.
American and Continental Airlines Inc. (CAL) have said they
continue to cut seat capacity to keep pace with weak passenger
demand, as both business and leisure travelers curtail their
plans.
Those who have bought tickets this year have gotten some good
deals. Airlines repeatedly cut fares this spring, even as their
costs, especially for fuel, have been rising. But "the pace of
domestic airfare sales has dried up recently," said Rick Seaney,
who tracks U.S. air fares on the farecompare.com website.
"I have been cautioning consumers for the past month that they
procrastinate on purchasing airline tickets at their own risk - two
airfare hikes in the past few weeks is the strongest signal I have
seen that the bottom is either here or near," Seaney said.
-By Ann Keeton; Dow Jones
Newswires;312-750-4120;ann.keeton@dowjones.com