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March 17, 2008

UPDATE: The Airlines’ Big $50 Price Hike (And What You Can Do About It)

Filed under: Fuel Surcharges, Airfare Increases, Pricing Activity — Rick Seaney @ 11:27 am

By Saturday night, it was official: Northwest had joined the other legacy carriers in the unprecedented $4 to $50 roundtrip increase (an increase initiated by United last Thursday).

If you’re keeping score, this is the 4th increase by legacy airlines in as many weeks (but as you’ll see, a couple of airlines are “wavering” a bit).

And yes, it’s all about the high cost of jet fuel.

My predictions, and what we passengers can do, coming right up (just click “more”).

First of all, United and Continental Airlines had some partial rollbacks late in the weekend that are more than just normal competitive “pressure” — the rollbacks are much less, though, than anything that would “end” the increase — so far.

Meanwhile, as the price of jet fuel continues to rise, here’s the some other things the airlines MAY be considering:

  • Airlines can continue with increases every week or so (until corporate and leisure passengers begin to push back)
  • Ground a significant portion of unprofitable flights (though they have been following this strategy for the past few years)
  • Spin off or divest assets (frequent flyer programs, maintenance operations, etc.)
  • Merge (though this won’t be much help in the short term)
  • Combination of the above

What can passengers do?

Unfortunately, travelers better prepare themselves for more inconvenience and packed planes (if that’s even possible!) along with higher prices for the foreseeable future. But you do have some options:

  • Passengers must be willing to be more flexible than ever (especially for leisure travel)
  • Airlines will continue to be promote deals in certain cities (aggressively seek them out)
  • Passengers should travel only on the very cheapest days: Tuesday, Wednesday and Saturday
  • Look for the “off-the-beaten-path” destinations (as opposed to the most popular vacation spots)

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