NEW YORK – A fare increase by several major U.S. airlines will stick this time around, after a host of failed attempts over the past year, according to an analyst at JP Morgan.
Trying to offset soaring fuel costs, American Airlines (AMR) on Thursday raised its fare by $5 on one-way tickets, excluding high-end walk-up fares, structured leisure fares, and fares competitive with Southwest Airlines.
Last week, American spearheaded a similar increase, boosting fares in North America by as much as $10 on round-trip flights, which was matched by most U.S. airlines. With the latest fare hike, most low-end fares have increased $20 per round-trip in just the past week.
"For those that have routinely bemoaned the apparent lack of industry pricing power, it would appear that we may have reached an inflection point where legacy carriers are slowly regaining their pricing traction," JP Morgan analyst Jaime Baker wrote in a research note.
"Northwest has routinely blocked efforts aimed at increasing the entire fare spectrum, whereas it typically does go along with efforts aimed at raising low-end levels," Baker wrote.
"American's effort appears to be constructed with Northwest specifically in mind."
Multiple attempts to raise fares this year have been short-lived because of the intense price competition in the industry. Fare hikes failed when some carriers did not follow suit.