NEW UPDATE (AS OF 5-9-08): ALL LEGACY CARRIERS NOW MATCH HIKE!

Last night, Delta Air Lines initiated the 15^th attempted domestic airfare increase of 2008 by raising its fuel surcharge by an additional $20 roundtrip; this surcharge affects the bulk of its route system.

The new total fuel surcharge (on numerous Delta city-pairs) is now up to a record $130 roundtrip.

Even worse, this means the total fuel surcharge combined with taxes and fees costs more than the actual base airfare on several short-haul domestic flights.

Let’s dig a little deeper, shall we? Keep reading…

Yesterday Delta Airlines began the 14^th attempted domestic airfare hike which will affect the bulk of its route system (that’s over 13,000 city-pairs). United Airlines joined yesterday, and American came onboard today.

The increase - in the form of a fuel surcharge - is from $10 to $40 roundtrip, depending on the type of airfare and city-pair.

This means, travel between some city-pairs will include a whopping $110 roundtrip fuel surcharge. In comparison, the average transatlantic fuel surcharge is about $230 roundtrip.

It appears that Delta is poised to make its CEO’s call for a 15-20% airfare increase (to offset fuel prices) a grim reality in the coming the weeks. I’ll explain, if you keep reading.

Yesterday, April 22, I reported that Delta CEO Richard Anderson said, “An airline ticket has got to reflect the full cost of fuel.” Then he got down to specifics:

Domestic airlines need to raise fares by 15% to 20% (and that’s just to break even).

I’ve decided to monitor this situation closely, to see if Delta and other airlines perhaps really do raise the price of their airline tickets by 20%; I want to see if (and when) this prediction comes true.

So stay tuned.

Did you see those big, bold headlines (on CNN and elsewhere) talking about Delta’s “whopping” losses? Most of them were along these lines: “Delta Reports $6.39B Quarterly Loss”.

$6.39 billion! But, wait. The “realoperating”loss is just…$274 million. Substantial, yes, but nowhere near billions. The other $6.1 billion or so “paper loss”is the “drop” in their expected stock price after coming out of bankruptcy (called a special item - I would say a very special item).

A quick review of the airlines 1^st quarter losses of 2008 (and, Southwest’s profits):

• Southwest Airlines - $34 million profit
• AMR (American Airlines) - $328 million loss
• Continental Airlines - $85 million loss
• UAL (United Airlines) - $542 million loss
• AirTran - $34.8 million loss
• JetBlue - $8 million loss
• Delta Air Lines - $274 million loss
• Northwest - $191 million loss

Reminds me of the screaming headlines from last month that claimed Southwest was supposedly flying unsafe planes. They weren’t. But the headlines garnered a lot of attention, which apparently was all that mattered.

A frightening quote from the CEO of Delta Airlines is reported by the Associated Press today: Richard Anderson told reporters that domestic airlines need to raise fares by 15% to 20%.

He added, “An airline ticket has got to reflect the full cost of fuel.” Right now, airline tickets don’t; you’ll see what I mean when you check out the chart detailing the airlines’ losses (see following page). Simply put, the fuel prices are killing them.

For those of you keeping score, there have been 12 attempted airfare hikes so far this year (8 widely successful), and now Delta’s CEO is telling us, there will be more. But what else can they do? According to Northwest’s CEO, cost-cutting measures “have largely been exhausted.”

My recommendation: if you’re traveling this summer, buy those tickets now, to lock-in the airfare price before it goes higher. And for more on the airlines’ latest losses, click here.

Update: If you missed me on CNN, you can check out the video here.

I’m on CNN again today (12:10 EDT), talking about the Delta/Northwest merger.

One of the things I want to do is allay some fears about what this will mean to individual passengers.

I can say this: if you have tickets, don’t worry about it — they are still good — and so are your frequent flier miles.

If you see the broadcast, let me know what you think!

Update: It has been officially announced this evening see the AP story here

I guess I should say, watch this space.

Because, according to reports, a merger between Delta and Northwest is getting very close (though no one from either airline is commenting). We are hearing that an announcement could come today.

If the merger goes ahead, it will create the world’s largest airline — and possibly spur new merger agreements.

The proposed merger between Northwest Airlines and Delta Air Lines is like something you might see in a celebrity gossip magazine. Are they together? Are they apart? Well, it depends on what week it is.

The latest news from the merger front is that Northwest Airlines and Delta Air Lines are back on. Pilots with both carriers have raised issues that have helped to stall merger talks, but now it seems the airlines might be willing to move forward without the full blessing of the pilots…

We are now in uncharted waters.

There has never been a time since we began closely tracking airfares back in 2002 with so many attempted airfare hikes of this frequency or magnitude. Nothing to compare it to.

Now it’s Delta’s turn — again. The carrier tried and failed with a $10 airfare hike last week, but today it’s trying with a $10 roundtrip domestic fuel surcharge.

Look for this to affect 21,000 business airfares city-pairs (without 14 day advance purchase) and 15,000 city-pairs for leisure travel.

Last night, Delta Air Lines added another $10 roundtrip increase to this past weekend’s increase of up to $50 roundtrip.

That first hefty hike was initiated by United, and then all the legacy carriers joined in.

But this latest increase from Delta, well, I am trying to think of a word other than “unprecedented” so I guess I’ll start using “remarkable.”

And that’s because, in 6- years of tracking airfares, I have never seen an airline fire out a system wide increase on anything but Thursday or Friday!

Keep reading…

This…is really something.

Delta is offering severance payouts to more than half its workers – about 30,000 people in total. Ultimately, however, the airline is only looking to reduce its workforce by about 2,000. For now, anyway.

And, they will cut capacity by 5%. According to a memo I received from Delta’s CEO and President, the airline will make this reduction by August “through a combination of decreased utilization and parking 15-20 mainline aircraft and 20-25 regional jets.”

Once again, the rationale behind all this is soaring fuel prices. According to the same memo, Delta’s fuel prices for the past 3-months “have climbed nearly 20 percent and our 2008 fuel bill is now expected to increase by nearly $900 million.”

Keep reading for all the details (just click “more”).

Saw an interesting roundup of airline/fuel-related stories in USA Today; what really caught my eye was their use of the word “ominous” in the headline.

Various publications were quoted about airline CEO’s statements or hints of coming changes to deal with the situation, a situation I’ve been closely following right here in this very blog.

Some are suggesting pulling out of unprofitable markets; Delta has already done it. Click “more” for the details.

This evening in the 8:00pm EST domestic airfare distribution, US Airways matched the increase initiated earlier in the day by Delta Air Lines on over 6,000 city pairs. This leaves American, Continental, Northwest, and United yet to match of the six remaining legacy airlines.

A quick check of route overlap between US Airways and Southwest Airlines shows the $10 increase in a smattering of common routes with the bulk of overlap city pairs showing no increase. Tip-Toeing around lower cost airlines has been a constant theme in most of the “successful” increases this year…

We seem to be hurtling toward a Delta-Northwest merger. What’s the rush? Here’s the inside story.

Some of Delta’s biggest shareholders just want it done: Delta creditors had earlier refused an offer to merge with US Airways, and the stock price dropped by a third. Now, says an airline industry analyst, the feeling is it’s time to make a deal, because unlike that popular TV show, there’s not going to be a last minute appearance by “The Banker” with a better offer.

Meanwhile, Northwest has problems because of its aging fleet. It needs to upgrade, but doesn’t have the cash. Merging can fix that.

But more than a few passengers are asking, “What’s your hurry?” Let me explain.

Anyone who is a member of a frequent flier program knows that there are a lot of emails involved. Generally, it’s “Come to Vegas,” “Sign-up for this Credit Card,” or “Fly to Europe.” Pretty standard airline marketing stuff. But I must admit, Delta SkyMiles threw me for a loop today.

Forget about Orlando. New York is a thing of the past. Never mind about Vegas. Come to Eureka! Yep, Delta contacted all of its SkyMiles members (millions) to get them jazzed about dropping everything and heading out to Eureka…

The nationwide sale is one in a line of Southwest Airlines airfare sales that have hit the market of late. This latest Southwest Airlines Nationwide sale offers airfare for $49+ to $99+ one-way to cities all over the country, and it’s good for travel on Tuesdays and Wednesdays between February 19th and June 25th.

Well, other major airlines don’t seem to be wasting any time in matching Southwest. Some competition is stirring, and this can mean great savings and a variety of options for travelers. Keep reading for a breakdown of all the action…

Delta Air Lines and Northwest Airlines have both matched the doubling of the fuel surcharge from $20 to $40 initiated by Continental Airlines late yesterday evening - leaving American, United and US Airways on the sidelines for the moment.

In the past several airfare increase attempts, Delta Air Lines has been quick to pull the matching trigger (almost always within half a day) where Northwest Airlines has usually been late to the party (one of the last to join in)…

This evening in the 8:00pm EST domestic U.S. airfare distribution the FareCompare.com proprietary airfare processing system noted significant system wide airfare increase matching activity by Delta Air Lines.

Earlier today American Airlines raised its fuel surcharge to $40 roundtrip ($20 one-way) on the majority of it’s route system - this was on the heels of a failed attempt earlier in the week by the legacy airlines to raise fuel surcharges to $50 roundtrip ($25 one-way)…

This morning in the 10:00am EST domestic U.S. airfare distribution the FareCompare.com proprietary airfare processing system noted significant system wide airfare increase rollback and matching activity related to the United Airlines $50 roundtrip fuel surcharge increase attempt this past Friday.

The fuel surcharge increase price roller coaster continues this morning as both American Airlines and United Airlines (the initiator of the increase) have both rolled back their fuel surcharges to pre-increase levels — meanwhile Delta Air Lines who rolled back last night has reinstated the increase this morning.

UPDATE: We did get a comment from United spokesperson Robin Urbanski, who said only, “We rescinded the move to keep our fares competitive with other airlines.” Pretty self-explanatory. American Airlines rep Tim Wagner echoed those sentiments, saying his carrier rolled back because “We weren’t competitive.”

This evening in the 8:00pm EST domestic U.S. airfare distribution the FareCompare.com proprietary airfare processing system noted significant system wide airfare increase rollback activity related to the United Airlines $50 roundtrip fuel surcharge increase attempt this past Friday.

Tonight Delta Air Lines completely rolled back airline ticket prices — to Friday mornings previous levels — before they originally matched the 50$ roundtrip fuel surcharge increase initiated by United Airlines late Friday evening.

This evening in the 8pm EST domestic U.S. airfare distributions, the FareCompare.com proprietary airfare processing system noted a fuel surcharge increase by Delta Airlines matching the $25 each way fuel surcharge filed by United Airlines at 12:30pm today.

Normally, we see fuel surcharge increases of $5 each way or occasionally $10 filed as a roundtrip - so this move by United and now Delta is unprecedented. (FareCompare has been tracking airfare since Oct 2004).

Yes, United Airlines has just raised its fuel surcharge for most flights–and that means, most travelers will now pay a whopping $50-per round-trip above the base airfare.

There’s only one word for this: Unprecedented.

We contacted Robin Urbanski, a spokesperson for United Airlines, who responded to our questions by saying, “Every penny increase in a gallon of jet fuel costs our industry $195 million annually, and while we operate more efficiently, we must be able to pass commodity costs on to customers, as other industries do.”

When we asked why United decided to put the unprecedented increase into effect now, Ms. Urbanski said, “Increases in the cost of fuel continue to be unprecedented.”

These fuel surcharges will go into effect NOW. We are expecting some airlines (if not all) will soon start matching this.

– Graeme Wallace, CTO FareCompare.com