DALLAS — Finally, score one for cheaper airfares.
American Airlines is giving up on its attempt to boost prices $10 on round-trips within the U.S. after other airlines declined to match the increase. American increased fares Wednesday night.
Airlines have raised prices several times this year, citing the need to cover the rising price of fuel, which can account for more than one-third of their spending.
American spokesman Tim Smith confirmed on Friday that American had rolled back the latest increase of $10 on flights within the lower 48 states and about $20 on round trips to Hawaii and Canada.
Airlines usually try to match the prices charged by rivals on most routes, so American was pressured to retreat when other airlines declined to increase their fares.
Rick Seaney, CEO of travel website FareCompare.com, said it was too soon to know if consumers have reached the limit on airfares. He said airlines might want time to see if the last several fare increases lead to a drop in ticket demand. He predicted the airlines will try again to raise prices.
Ray Neidl, an analyst for investment bank Maxim Group, said airlines might have believed that this week was a bad time to raise prices due to turmoil in the Middle East and uncertainty about oil prices. He predicted that airlines will continue to raise revenue with fees and by selling fewer discounted seats.
While airlines have raised prices in small increments — and more on high-priced tickets favoured by corporate travellers — they often offer sales at the same time that blunt the increases. Average airfares rose only 1 per cent between fall 2000 and fall 2010, the most recent figures available from the Department of Transportation.
Over those 10 years the price of jet fuel doubled. It has increased nearly 50 per cent more since last September.
