United, Continental, Delta and American raised many of their domestic fares by USD20 a round trip and cut that increase to USD10 by 28-Mar-2011 due to pressure from US discount carriers (AP/New Mexico Business Weekly, 01-Mar-2011). The carriers have reportedly attempted five broad-based price increases in 2011 with most of them sticking. CEO of FareCompare.com Rick Seaney stated the recent rollback occurred after Southwest, JetBlue, AirTran and Frontier began raising fares only half as much as the larger carriers. Southwest reportedly led the resistance to the fare hike.
US carriers roll back fare increase
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Cuba's alluring new mystique quickly fades as US airlines face overcapacity and sluggish demand
Close to a year ago the US airlines were rushing to gain approval to operate scheduled service to Cuba, after a hiatus of more than 50 years. The competition was intense, with airlines strongly criticising the touted merits of the service proposals offered by their rivals. The opportunity for operations to Cuba seemed endless, and US airlines from wide ranging business models worked feverishly to ensure that they earned access to what was deemed the next big market for burgeoning traffic potential.
But underlying the excitement were concerns over Cuba’s ability to handle an influx of travellers to the US, and whether the expectations for demand between the two countries were overblown. Recent cuts in Cuban capacity by US airlines show that those operators were somewhat overzealous in their initial demand calculations, and the spool up period for those routes.
The tempered ambitions reflect the realities of actually operating in a market versus estimating the demand patterns of a new market but having little in the way of concrete data to work with. Due to market overcapacity, two US airlines are pulling service to Cuba altogether.
Southwest Airlines:domestic changes, continued international expansion, as overall 2017 growth slows
Southwest Airlines plans lower system capacity growth in 2017. The company joins other US airlines working feverishly to return to positive unit revenue as oil prices and labour costs are forecast to rise for most of the country’s airlines.
Even as Southwest’s capacity increases are projected to fall year-on-year in 2017 the airline is broadening its international reach with the debut of new flights from Fort Lauderdale, and is making moves in its domestic network.
This includes its decision to launch service from Cincinnati, a market that has attracted significant low cost service during the past two to three years as its hub status for Delta has diminished. Southwest’s service entry at Cincinnati comes at the cost of flights from Akron and Dayton, which is not surprising, given Cincinnati’s potential to garner higher revenue.
Although Southwest cited some positive trends at the end of 2016, it struck a cautious tone about the operating environment in the US, noting that while yields were improving, the revenue environment remains challenging. US airlines, including Southwest, are being closely watched after declaring they will return to positive unit revenue in 1H2017.