Some airlines in the United States have raised their fares for the third time in a month, and analysts expect Canada’s air carriers will follow suit shortly.
Air Canada and other Canadian airlines will follow the American lead and raise ticket prices in the coming months, analysts say. (Frank Gunn/Canadian Press)
The increase on many U.S. domestic routes ranges from about $4 to $10 US per roundtrip ticket, depending on the length of the flight.
Chris Murray of PI Financial Corp. said he expects WestJet, Air Canada and Porter Airlines to increase fares in the coming months, but he wouldn’t put an estimate on the increases.
Last week, WestJet said it expected revenue per available seat mile to increase in the fourth quarter. Murray expects part of that will be from higher ticket prices.
“I think you’re going to see it everywhere and you’re going to see it both in the premium and economy cabins,” Murray said in an interview.
Sustained increases in fuel costs would also push the airlines to increase fares or add surcharges, Murray added.
Southwest Airlines, which boasts about low fares, appears to be the prime mover behind the latest price hike.
Southwest spokesman Brad Hawkins said the U.S. increases will help offset higher fuel and operating costs.
Rick Seaney, the CEO of website FareCompare.com, said Southwest jumped in and raised prices across most of its routes after some airlines made modest increases on flights to and from cities in the Midwest last week.
Price hikes likely to stick
The Southwest increases were matched by other major U.S. airlines including American, Delta, United, Continental, US Airways and Frontier, making the price hikes likely to stick, Seaney said.
American and US Airways confirmed matching Southwest’s increase, while others did not immediately comment.
Seaney said he thinks the latest fare hike at U.S. carriers has more to do with the restricted supply of airline seats than with fuel prices.
U.S. airlines lost billions in 2008 and 2009 but turned profitable last year and are expected to make more money in 2011.
They have boosted revenue by charging more for flights on peak travel days and imposing fees for checking bags, changing flights, and other services.
The International Air Transportation Association expects the world’s carriers will earn $9 billion Cdn in 2011 as traffic improves slightly.
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