Feb. 23--Despite slumping fuel costs that are boosting profits for airlines, the nation's largest carriers are increasing their fares $10 per round trip, the third increase of the year.
The fare hike on most U.S. routes was initiated Friday by Southwest Airlines, the nation's largest domestic carrier. It was matched soon after by Delta, United and American Airlines. As of Tuesday, the increase remained in place, according to Rick Seaney, founder of travel site Farecompare.com, which has been monitoring fare increases.
The latest hike, combined with prior increases in January and February, combined to raise airfares $22 for round-trip flights. New York-based JetBlue and Atlanta-based Delta Air Lines initiated two other fare increases, both in February, but the carriers rolled the increases back when they were not matched by other carriers.
Seaney said the latest increase probably will be felt mostly by business travelers who book at the last minute and passengers to smaller cities, where competition is low. Travelers on routes where competition is strong may not see much of an increase, he added.
The fare hikes come at the same time airlines are reporting near record profits as they collect hefty revenue from additional passenger fees, such as bag-check charges. Meanwhile, the industry's biggest expense, fuel, has dropped in cost by at least 40% over the past year.
In the three months ended Sept. 30, U.S.-based carriers reported a net profit of $9.3 billion, up from $3.1 billion in the same period in 2014, according to the Department of Transportation.
But the airline industry maintains that despite the increases, airfares have remained flat or slightly down over the past year when adjusted for inflation.
"It is important to note that while fuel is down, other operating expenses, including labor, which is now our largest cost, is up," said Vaughn Jennings, a spokesman for Airlines for America, a trade group for the airline industry.
"Simply put, air travel remains one of the best consumer bargains out there, as evidenced by the increase in the number of people flying," he said.
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