Major airlines matched a Southwest Airlines fare increase as part of an ongoing push by carriers to recover more of their fuel costs.
Southwest increased most of its fares Friday by up to $10 each way, including in Denver. Major carriers that followed include United Airlines, the largest carrier at Denver International Airport. Denver-based Frontier Airlines matched the fare increase in most markets, said spokesman Joe Hodas.
This is Southwest’s first fare increase of the year after the Dallas-based carrier hiked fares six times last year, said Southwest spokeswoman Paula Berg. Southwest had a 4.7 percent market share at DIA as of December.
Other airlines also have made moves to increase fares over time, which has been increasing the cost of flying nationally. But some attempts by other carriers have not been successful.
The Denver market has managed to resist fare increases since Southwest Airlines started flying to Denver last year and United and Frontier stepped up the competition. However, Frontier and other carriers are eager to see fares increase here to bring in more revenue.
DIA had a 4 percent fare decline in the third quarter of 2006 compared with a year earlier, while fares nationally increased 7.5 percent, according to the U.S. Bureau of Transportation Statistics’ most recent Air Travel Price Index.
Airline analyst Ray Neidl of Calyon Securities, in a report Monday, called Southwest’s initiation of a fare increase “a major positive development for the industry.”
“Southwest tends to be the price leader and has spoiled two of the three previous attempts to raise prices this year,” Neidl said. “The carrier wants to maintain its image of being a low-fare carrier and usually tries to initiate increases around holiday periods.”
Southwest increased one-way fares by up to $3 in some of its markets under 1,000 miles and by $10 in markets over 1,000 miles. About a third of customers are affected by the increase of up to $3, and about 25 percent are affected by the $10 increase, Berg said.
“It’s still about fuel,” Berg said. “Fuel is going up. We can’t predict it, but it remains extremely high, and we have to counter that somehow.”
The airline industry has been in a recovery that is expected to continue this year. Among the carriers continuing to struggle is Frontier, with its high concentration at DIA.
Southwest has benefited for years from fuel hedges that locked in low fuel costs. The airline still has fuel hedges for future years, but they are not as favorable as in the past.
Staff writer Kelly Yamanouchi can be reached at 303-954-1488 or kyamanouchi@denverpost.com.
