Airlines are trying to push air fares upwards now and they’re citing rising fuel costs.  Make no mistake, fuel costs are the bane of every airline’s daily existence and they must watch them and respond if they expect to earn a profit. 

And fuel costs have risen.  But let’s not forget that air fares rarely drop quickly when fuel costs fall.  So, yes, it’s necessary to raise prices when costs go up but that isn’t the only component going on here.

The truth is, US airlines have “gotten it” in a way that they haven’t over the past 40 years.  Capacity discipline on routes is the cornerstone to all of them succeeding and even their fare hikes and fare drops are negotiated in a public ballet of bids made by each airline to see if others will follow. 

But it’s capacity discipline that lets them raise fares and fuel costs that require them to try.

Filed under: Airline News by ajax
No Comments »