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April 24, 2008

United Raises Prices AGAIN — Waiting to See if the Others Follow

Filed under: News, Airfare Increases, United — Rick Seaney @ 5:21 pm

At noon today, United Airlines initiated the 13th attempted domestic airfare hike of 2008 - and note that, 8 of the previous 12 were widely successful.

I immediately broke this story, and it quickly appeared in media reports.

Details on the price hike: United raised airfares across the bulk of its domestic route system in a laddered fashion from $4 to $60 roundtrip for leisure travelers in over 5,500 city-pairs, and from $4 to $70 for business travelers in over 9,000 city-pairs.

The AP reports that United blames this 3% to 5% hike on, what else: soaring fuel costs.

You won’t have to travel too far to get hit with a substantial increase; keep reading for more on that.

A quick check of city-pair with increases shows that the laddered hike does not closely follow flight distance as many city-pairs less than 500 miles apart have been hit with a $20(or more) roundtrip increase. Our software shows over 20 different price increase levels in the $4 to $70 range - the most we have recorded for a laddered increase which almost always has only a few price levels.

United by far has been the most active instigator of airfare increases in 2008, initiating 8 of the 13 airfare increase attempts this year - making one wonder how they racked up such a huge loss in the first quarter - certainly it wasn’t for lack of trying to increase airfares.

I found it a bit ironic the other day when the CEO of Delta “called” for airlines to raise airfares across the board by 15% to 20% to offset fuel costs - in days gone by there had been much ado about signaling between the “back rooms” of airlines on price hikes - now this “signaling” is apparently done via press release.

To fulfill the wishes of the Delta CEO, he needs a lot of cooperation from the other legacy airlines which means we may be in for several more active weeks of increases including the one today by United Airlines.

Unfortunately for air travel consumers this 13th increase of 2008 puts us on pace for just under 40 increase attempts this year compared to a total 23 increase attempts (17 widely successful) in 2007 ( by far the most in 3 years prior to 2007)..

I have updated our 2008 airfare hike timeline as follows:

1. January 3rd, initiated by United, $10 roundtrip, successful (sticky)

2. January 11th, initiated by United, $30 roundtrip, unsuccessful

3. January 17th, initiated by American, $20 roundtrip, unsuccessful

4. January 24th, initiated by Continental, $20 roundtrip, successful (sticky)

5. February 22nd, initiated by United, $10 roundtrip, successful (sticky)

6. February 28th, initiated by Delta, $10 roundtrip, successful (sticky)

7. March 7th, initiated by United, $10 roundtrip, successful (sticky)

8. March 14th, initiated by United, $4-$50 roundtrip, successful (sticky)

9. March 19th, initiated by Delta, $10 roundtrip, unsuccessful

10. March 27th, initiated by Delta, $10 roundtrip, unsuccessful

11. April 9th, initiated by United, $4-$30 roundtrip, successful (sticky)

12. April 15th, initiated by United, $10-$20 roundtrip, successful (sticky)

13. April 24th, initiated by United, $4-$70, pending

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