If you feel like airlines are always raising prices, you’ll be happy to know the first airfare hike of the new year has been officially rescinded in the Lower 48. United Airlines raised fares last week, followed by Delta. But the hike fizzled out, perhaps because one 800-pound gorilla refused to play along.
When an airline wants to raise prices, it can’t just sit down and confer with the competition.
“The danger is that it’s against the law,” says Charlie Leocha, director of the Consumer Travel Alliance. “Executives will go to jail. So, they’re not interested in that.”
Instead, an airline floats a trial balloon, like United did last week. It raised fares by $2 here, $5 there. Then, it watched to see who matched them.
“The big stick in the mud for raising prices historically has been Southwest Airlines. If they don’t come along with the hike, typically the hike fails,” says Rick Seaney, CEO and co-founder of FareCompare.com.
If airfare pricing is like a giant game of chicken, Southwest has an advantage, as the biggest domestic bird. Seaney says (not really joking) that airlines are so competitive, a fare difference of a dollar can land a carrier on page 25 of your search results — and no airline wants to be on page 25.
So rest in peace, 2013 fare hike #1.
As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.
Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.
Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.