Rising fuel prices: $10 minimum higher airfares, scrapped growth plans
With crude oil prices overpassing $100 a barrel, airlines are forced to review plans for 2011. Airfares are rising already. Growth which was originally intended, turns into sustainability.
All major US airlines have already increased the airfares by $10 minimum.
United scrapping growth plans
On Monday, United Continental Holdings announced the reconsideration of 2011 growth plans. The previously planned 2% growth has now changed into sustainability. The amount of flying is said to remain about the same as in 2010. The company communicated, without further details, that unprofitable routes will be cut and less fuel-efficient planes are to be removed from the fleet. With the United Airlines and Continental Airlines merger under way, they have plenty to choose from.
Southwest, JetBlue, AirTran all rising airfares
Over the past few days, all major US airlines have joined the price increase. Delta Air Lines was the first to add up to $20 to a round-trip ticket on Friday. It was soon followed by American Airlines, raising the average fare by $10. Low cost airlines, such as AirTran, JetBlue and Virgin America succeeded over the weekend. The last major carrier, Southwest Airlines, managed to wait till Monday but increased the fares eventually too.
The future is uncertain
Airlines are now being very careful about 2011. While bookings were generally growing last year, the uncertainty regarding future oil prices makes them reconsider the future plans. One thing remains almost certain, the current airfare increase is permanent.
Jiří Parimucha, Mar 8, 2011
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