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Domestic U.S Airlines hike airfares despite cheap oil windfall

by amit.uniyal 18. October 2014 07:37

Holiday Travel may burn a hole in your pocket as U.S. air passenger carriers raised the base fares for domestic flights last week. Despite the good fortune of decreased oil prices and Ebola epidemic distress, the 5 major airlines in U.S have attempted a fare hike in October 2014 thrice, wherein the third attempt was successful.

US airlines

The fare hike was initiated by JetBlue Airways with up to $4 round trip raise on some domestic flights’ fares. 4 hours later, Delta jumped on the bandwagon and extended the increase with 37 times as many fares. American Airlines, US Airways and Southwest Airlines following suit on Friday. Airlines usually hike fares to rationalize the higher costs, especially for fuel. However, oil prices have gradually plunged in a few weeks and carriers are gaining a windfall.

Although Ebola epidemic was believed to tumble the stocks down and that the people will be reluctant to fly. However, the demand has only surged with the holiday season.

According to an investment analyst, this hike represents the first successful increase across the domestic aviation industry since April and the fifth one this year. These price bumps should allay the investors’ concerns that lower fuel prices will only profit the consumers with lower air fares.

Airlines do not also want to charge more than Southwest Airlines, the low cost carrier with maximum number of domestic passengers, so they run sales, reduce fares on certain flights and try to fill middle seats with extra perks.

Traveling on Thanksgiving weekend will pinch the passengers’ pocket as the domestic flights’ fares are up by 17% at $467 in comparison with $400 in 2013. On the other hand, fares for Christmas holiday flights will increase by 2%, averaging at $493 as compared to $482 last year.

Meanwhile, Wall Street remunerated the fare hike as the shares for airlines gained an average 5%.

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Tags: u.s airlines

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