Last week, a number of airlines raised airfares in an attempt to deal with rising cost of fuel, and find a price consumers could live with. Airlines such as United, Continental, Delta, and American all raised their airfares by $20.00 on round trip domestic flights.
This week however, these same airlines cut in half the price hikes they instituted last week. In an article this morning by the Associated Press, airline industry analyst Rick Seaney said the rollbacks were due in part to the lower fare airlines not following suit in their price hikes.
Rick Seaney, CEO of website FareCompare.com, said the rollback occurred after low-fare airlines Southwest, JetBlue, AirTran and Frontier began raising fares only half as much as the larger carriers. He said the network airlines then cut their increases in half to avoid charging more than their low-fare competitors.
The bottom line here for US consumers is that airfares for this year will be volitale, and change frequently as it appears a new price war is taking shape in the airline industry as costs battle consumer willingness in the efforts to find a median price that both sides can live with.
The airfare hikes of last week, coupled with the airfare cuts by the same airlines this week, shows just how much consumers are in control of an industry seeking the right price to attract passengers to their airlines.
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