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Higher air fare on the way? Continental DOUBLES fuel surcharge prices

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posted on Jan, 25 2008 @ 12:04 PM
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Higher air fare on the way? Continental DOUBLES fuel surcharge prices


www.reuters.com

NEW YORK (Reuters) - Continental Airlines Inc said on Friday it raised its fuel surcharge on domestic U.S. plane tickets to $40 per round-trip from $20, marking the latest test of airline pricing power.

The increase marks the industry's third attempt in as many weeks to raise fees to offset high fuel prices. The previous two attempts -- one led by United Airlines and the other by American -- were initially matched by other major airlines but failed to hold after consumers balked at the higher fees.

The latest increase comes after the White House and congressional leaders confirmed a $150 billion U.S. economic stimulus plan. But it remains to be seen whether the program will ease consumer concerns and pave the way for higher air fares.

"It is highly likely the increase will be matched quickly by others, with a showdown early next week to see if the increase will remain 'sticky,'" said Rick Seaney, chief executive of fare tracker FareCompare.com.

Fuel expenses have historically ranged between 10 percent and 15 percent of an airline's operating costs. But with oil near record levels, that expense has jumped to between 25 percent and 40 percent of operating costs, according to the Air Transport Association.

U.S. airlines have struggled to pass on these higher costs.

In the last few days, American Airlines parent AMR Corp, United Airlines owner UAL Corp, and Delta Air Lines Inc all posted fourth-quarter losses because of soaring fuel costs.

Continental was a rare exception. It posted a pretax profit in the fourth quarter, boosted by its strong international route network.

(visit the link for the full news article)




posted on Jan, 25 2008 @ 12:04 PM
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Well, it may start getting even pricier to fly in the coming months. I know the airlines are struggling with the disgusting price of fuel, but many americans don't have the means to make up for those extra prices either. Everybody is hurting right now...

www.reuters.com
(visit the link for the full news article)



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