But Will It Stick?
Continental Airlines raised fares again last week,
and could go for more in response to a rival's move to increase the
cost of some plane tickets.
It's the latest in a flurry of pricing adjustments as the
airline industry, still reeling, financially, tries to stem the
tidal wave of red ink.
Continental raised fares by $10 on flights originating or ending
in its three hubs: Houston, Newark and Cleveland, spokesman Rahsaan
Johnson said.
Blame Oil
The carrier said rising oil prices were to blame
for the fare increases. That was the same reason Continental cited
last week when it initiated a systemwide $10-per-trip hike.
That increase was matched by most other major airlines, but
Northwest matched it only on "selected" routes as of Saturday. As a
result, all the major airlines had scrapped the increase by
Monday.
However, Northwest turned around Thursday and put a $10 each-way
fuel surcharge in place on its worldwide advance purchase
fares.
The Houston airline's increase was matched by American, Delta,
US Airways and Midwest Express in Houston, Newark and
Cleveland.
In raising its fares, Northwest also blamed the rising cost of
jet fuel.
Bail-Out Was Bad News?
One airline industry analyst reported last week
the airline industry might not be in the terrible shape it's in if
Washington hadn't agreed to a $10 billion bailout after the 2001
terrorist attacks.
"In retrospect, had Washington allowed carrier failures post
9/11, surviving airlines would likely be better off today," J.P.
Morgan Securitities analyst Jamie Baker said.
Baker says, war with Iraq will only make the situation worse.
"In our view, additional wartime aid to the industry would only
prolong its agony. Don't look for Southwest and JetBlue to ask for
handouts, but Continental likely will."
Last week, the nation's airlines called upon the government to
tap the Strategic Petroleum Reserve to "moderate" the impact rising
fuel costs have on the nation's economy.
The Air Transport Association testified that fuel costs have
jumped more than 100 percent during the past year.
The industry group told a Congressional committee that every
penny increase in the price of jet fuel costs the airline industry
about $180 million per year.
For Continental, a $1 increase in the cost of a barrel of crude
oil equates to a $36 million increase in operating costs for the
airline.
"Crude oil is up $4 a barrel in one month, and $11 a barrel in
three months," Johnson said. "For every $1 increase in the cost of
crude, Continental's expenses increase $3 million a month."
The possibility of an Iraq war is also keeping some
transatlantic passengers home. "During the first two weeks of
February, industry Atlantic load factors are estimated to have
declined more than four points despite aggressive discounting,
versus flattish load factor trends domestically," Baker said in his
report.
Baker's report also suggested that if United Airlines has to go
the way of the dodo instead of pulling up from its nosedive into
bankruptcy, the surviving airlines would actually benefit.