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Airline Ticket Price May Surge To Cover Fuel Costs

Delta CEO thinks a 20% increase would just about cover it

By Mark Huffman
ConsumerAffairs.com

April 22, 2008

The topic of conversation was a proposed merger between Delta and Northwest Airlines, but the airline executive talked at length about fuel prices and his belief that they have to be reflected in ticket prices.

Right now, airlines have cut everything they can and rising jet fuel costs still have them running in the red. The only thing left, Anderson says, is to raise ticket prices by as much as 20 percent across the board. And that, he says, just gets the airlines back to break-even.

While no airline has recently announced a major fare hike, it would likely take just one to set off a stampede as other carriers matched it. And with the price of a ticket going up by 20 percent, that might take care of those long lines at the airport.

On the other hand, it might not. In his candid exchange with scribes, Anderson said higher ticket prices would likely mean fewer tickets would be sold, but that the airlines would counter by offering fewer flights.

Since the beginning of 2008, carriers have added a number of small fare increases here and there and many have tacked on fees for more than one bag and other services. For example, United Airlines recently announced it was increasing the fee it charges passengers to change tickets from $100 to $150 in an effort to combat high fuel costs. Others have begun charging for in-flight amenities.

Delta's proposed merger with Northwest Airlines is a combination that might encounter some stiff headwinds from Congress and regulators, who have watched in dismay as the airline industry has consolidated in the face of higher operating costs. But even with the merger, Anderson says rising fuel costs could prevent the combined airline from being profitable.

United today reported it lost money in the first quarter of this year, mostly due to rising fuel costs. Last week both American Airlines and Continental also reported losing quarters.

United said it would eliminate more than 1,000 jobs and trim its flight schedule.

So for consumers, air travel doesn't appear to be getting any easier – and may be about to get a whole lot more expensive.

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