Northwest Airlines Corp. complained the loudest when Delta Air Lines Inc. capped many of its one-way fares at $499 in January. And on Friday, Northwest was the one to try to push those fares higher, tacking $50 each-way onto fares aimed at business travelers.
If it sticks, it’ll be the largest of several fare hikes this year. Pushed by high fuel costs, airlines have been trying to raise prices this year. Some of the increases became permanent. Others fizzled because too few airlines matched them.
On Friday, Continental Airlines Inc. said it matched Northwest’s move, and UAL Corp.’s United Airlines did, too, according to airfare expert Terry Trippler of CheapSeats.com. AMR Corp.’s American Airlines did not match the $50 increase, but spokesman Tim Smith said they are studying it. Trippler said US Airways did not match the increase.
Delta said it had also not matched Northwest’s $50 increase, spokesman Anthony Black said.
However, in comments to analysts on Wednesday, Delta chief financial officer Michael Palumbo said the airline would consider increasing its “SimpliFares” cap.
“We can never say never,” he said. But he added that it’s critical that Delta “not irresponsibly break the covenant that we’re trying to create with the traveling public” by promising to cap fares.
“As I see it, if Delta doesn’t increase their cap, (Northwest) will probably have to rescind their increase,” Trippler said.
When Delta put in its SimpliFares caps in January, Northwest complained they would “immediately adversely and significantly affect industry revenues.”
It hasn’t been so bad, said analyst Suzanne Betts of Argus Research Corp.
“It didn’t really hurt as badly as they thought it was going to, and it did bring in more passengers,” she said. “Obviously the rising fuel costs since January is something that offsets those gains.”
Northwest gained little from the earlier, smaller fare increases because discount carriers haven’t matched them, said Tim Griffin, executive vice president for marketing and distribution, in a message to employees released by the company on Friday.
“The prior increases have run their course and we need to be more targeted in our approach,” he said.
Besides the $50 increase, Eagan-based Northwest announced that it would add a two-night minimum stay requirement to some fares that used to require just one night’s stay, and add $5 to $10 each way on fares that match those offered by discount carriers. American, Continental, and Delta said they matched the $5 to $10 increases.
Those fares are Northwest’s lowest “and represent the greatest revenue upside if increased throughout the industry,” said Jim Cron, vice president for domestic pricing.
