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Delta Abandons $499 Fare Cap

Southwest Reports Another Profitable Quarter

July 15, 2005
Desperate to deal with rising fuel costs, Delta Air Lines has abandoned its six-month-old $499 cap on one-way domestic last-minute fares, raising the ceiling by $100. Other airlines are likely to follow in Delta's wake. United and Continental have already matched Delta's higher fares on routes where they compete directly.

Delta Airlines • SkyMiles • Travel vouchers • Delta/AmEx promotions • European promotions • Reservations & itinerary changes • Lost/damaged luggage • Unaccompanied children • Puerto Rico USA • Miscellaneous --- News • Delta Adding Wi-Fi to All Flights • Delta Raises Second Checked Bag Fee to $50 • Delta Passengers Stranded 7 Hours on Plane • Delta Sells Ads on Boarding Passes • Delta, Northwest Merger Faces Heavy Chop • US Airways Makes Bid for Delta • Delta Beefs Up Routes, Retrofits Its Jets • Delta Begins Passing On Airport Fees To Passengers • Delta Writes Coda to Song • Delta Files for Bankruptcy • Delta Sells Regional Carrier To Raise Cash • Delta Abandons $499 Fare Cap • Delta Warns of Bankruptcy • Delta Passengers To Brown Bag It • Delta Cuts Fares

Delta said it is determined to stick with other parts of its SimpliFares program, which removes Saturday-night stay requirements for discount tickets and relaxes some -- though by no means all -- fees and rules for changing tickets.

Delta, the nation's third-largest carrier, has been skirting bankruptcy for several months and isn't not likely the SimpliFares adjustment will be enough to change its course.

Southwest Airlines, meanwhile, reported 41 percent higher earnings in the second quarter. The Dallas-based discount carrier has consistently reported profits while the rest of the industry runs up huge losses and despite rising fuel costs, Southwest CEO Gary Kelly said a decline in earnings "is not acceptable to us."

Kelly said Southwest was confident it can increase revenue enough to sustain its earnings growth. Its revenue growth comes partly from new routes and partly from its ability to attract new customers on existing routes -- something most other carriers haven't mastered.

Southwest has also benefited from some very shrewd management, including fuel-purchase deals that locked in low prices. Some of those agreements expire soon, leading to concerns among financial analysts that Southwest's earnings may falter in the months ahead.

Demand for air travel has been picking up and most airlines have experienced improved traffic as a result.

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