05-31-2002, 06:32 PM
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Senior Member
Join Date: Sep 2001 Location: IAH/HOU
Posts: 2,354
| Airlines' Leisure Fare Hike May Fail Airlines' Leisure Fare Hike May Fail Quote:
CHICAGO (Reuters) - A bid by major U.S. airlines to raise leisure air fares industrywide will probably fail because some carriers have only partly matched Continental Airlines (news - web sites) Inc.'s fare hike, analysts said on Friday.
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(the only way to win both ways) Quote:
"This signals their (Northwest's) decision not to participate in Continental's fare increase," Baker said, noting that the last real fare hike was in November 2000. "Northwest has been a key blocker for all recent attempts."
Houston-based Continental, the No. 5 U.S. carrier, raised most leisure fares on Thursday and has led previous bids.
Meanwhile, Fort Worth, Texas-based American Airlines (news - web sites) said on Friday it had matched the systemwide increase and Atlanta-based Delta Air Lines , the No. 3 U.S. carrier, said it had filed similar fares to stay competitive with Continental.
Northwest, the No. 4 U.S. carrier, did not match the increase and often holds out against systemwide fare increases, forcing competitors to roll theirs back or have a pricing disadvantage with the Minneapolis-based airline.
Chicago-based United Airlines (news - web sites), a unit of No. 2 U.S. carrier UAL Corp. , and Arlington, Virginia-based US Airways , the No. 6 U.S. carrier, also said they raised only a small number of leisure fares each.
United also increased fares on routes that compete with Frontier Airlines , a Denver-based, low-cost carrier that raised fares systemwide. United has a major Denver hub.
Northwest is outperforming competitors on its revenue per available seat mile figures, a key measure of financial health also called unit revenue, so its strategy of channeling demand along its existing fare curve rather than simply raising all fares appears appropriate for Northwest, though other carriers would apparently disagree, Baker said.
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