Filed under: Bad news, Products and services, Management, Consumer experience, Competitive strategy, Marketing and advertising, AMR Corp (AMR), UAL Corp (UAUA), Oil, Delta Air Lines (DAL)
In reaction to surging fuel costs, several major airlines announced this day that they were raising their fares in order to recoup some of their rapidly increasing flying costs.
The increase this time around is $20 and effects passengers traveling on UAL Corporation (NASDAQ: UAUA), Delta Air Lines, Inc. (NYSE: DAL), and AMR Corporation (NYSE: AMR)’s American Airlines. The $20 jump in prices will be added to the airline’s fuel surcharges, and consequently, these charges are now running at $130 round trip on most flights that you will book through the airlines.
The current rate hike was first initiated by Delta, and marks the second time in just over a week that the airline has been forced to raise fares in order to combat record high fuel costs. Times are definitely tough for airlines, and they’re doing everything they can to combat fuel prices, but regardless of the rate increases most analysts are still anticipating to see huge losses this year from most, if not all, airline carriers.
The airlines are definitely in a tough situation right now. They’re being forced to raise their rates to cover their costs, but at some point you’ve to assume that passengers are going to cut back on flying in reaction to the rising costs, and this would really put a crunch on the carriers that are already struggling to keep their heads above water.
With oil prices continuing to trade at record high levels, do not be surprised if you see more rate hikes coming in the months to come. Definitely a tough year for travelers: whether you’re driving to your vacation spots or flying, the costs just keep on rising.
How do you think current fuel prices will impact your travel plans for the summer? Will you continue to take your vacations as normal, or scale things back a bit in reaction to the rising costs?
Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the online investment advisory service Investor’s Observer.
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