Airfares on the rise

Delta Airlines’ CEO Richard Anderson plans to increase fares by 15 to 20 % and justifies this step by rapidly rising fuel prices. Delta Airlines, as well as most major US airlines, suffers from the massive increase in fuel prices and huge losses are the results.

Analysts suggest to reduce the airlines’ capacities to cut costs and increase efficiency by a higher passenger load factor. But the airlines are afraid of losing market share to competitors and size appears to be an advantage, because a good network helps to keep customers loyal, as they are more likely to stay with the airline or alliance from the departure to the arrival airport and as well on future trips. Airlines try to earn more money by charging extra-services, e.g. window seats, a second piece of luggage and fuel surcharges. Other airlines tell their pilots to slow down a bit which extends the total length of the flight only by a few minutes, but can save millions of dollars a year.

According to Fare-compare.com, fares of US domestic flights have been increased twelve times since the beginning of 2008. 

 In contrast to most US airlines, European airlines are currently better protected from the high oil prices because of the strong Euro and successful hedging. The major German carrier Lufthansa has managed to sustain earnings and expand its capacities in 2007 and is doing well in the first quarter of 2008.

http://www.bloomberg.com/apps/news?pid=20601085&sid=a3ByKDF1r5vo&refer=europe

http://www.redorbit.com/news/business/1357980/airlines_need_to_hike_fares_to_break_even_says_delta/

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