NEW YORK – As if on cue, airlines are responding to oil's latest surge by pushing ticket prices higher.
Round-trip domestic fares began rising $10 to $20 late Thursday as crude futures crossed the once-unthinkable $100-a-barrel mark. Several major carriers increased prices, with each citing higher fuel costs as the reason.
The widespread increases follow nearly two dozen attempted systemwide fare increases in 2007, or about double the number during the previous year, according to data compiled by FareCompare.com, which tracks airfare changes.
United Airlines, the second-largest U.S. carrier, led with the biggest round of increases Thursday night.
Tickets on short flights will cost $5 more one way, while trips of more than 1,500 miles – such as Chicago to Las Vegas or Boston to Denver – will cost travelers $10 more one way, spokeswoman Robin Urbanski said.
Delta Air Lines and American Airlines matched the increase yesterday.
Days before Christmas, United doubled a $5 fuel surcharge it added a month earlier, effectively raising round-trip fares by $10. Urbanski said that surcharge remains in place in markets where it was matched by competitors.
Urbanski acknowledged that fares in and out of some cities are higher than they used to be, but “are still relatively lower than a few years ago, given that fuel is our highest expense.”
The increases come as crude prices hover near all-time highs. Yesterday, light, sweet crude for February delivery fell $1.27 to settle at $97.91 a barrel on the New York Mercantile Exchange.
The Air Transport Association said higher fuel costs will likely limit U.S. airlines' profits to between $3.5 billion and $4.5 billion this year, down from an estimate of $5 billion last year.
JPMorgan airline analyst Jamie Baker said the latest increases aren't much of a surprise. He estimates that every $10 increase in the price of a barrel of oil means airlines need to generate an additional $18 in revenue from each passenger they fly.
From the beginning to the end of 2007, crude prices surged by nearly $35 a barrel.
