Southwest Airlines Adds Fuel Surcharge to Ticket Prices
The high cost of fuel has forced Southwest to add a surcharge to their ticket prices. I am glad of this as the death struggle that the airlines have been in has been devastating to the industry.
The increases range from $2 to $10 one-way, and they vary based on mileage and when a ticket is purchased. For example, someone buying a last-minute ticket for a coast-to-coast trip would see a one-way increase of $10. Someone buying a ticket in advance on a trip under 400 miles would see a one-way increase of $2.
The $20 round-trip increase amounts to the biggest single fare hike that Dallas-based Southwest has ever put in place.
Other airlines were quick to match the increase, which was put in place over the weekend. That included Houston-based Continental, American, Northwest, Delta and United.Southwest already raised fares once this year, airline analyst Jamie Baker of JPMorgan noted. This weekend’s increase covered markets that account for about two-thirds of the low-fare carrier’s network, he said in a report. via Chron.com
When an airline does not charge enough for their tickets to cover the cost of doing business, they are essentially saying to their shareholders, you will subsidize the traveler out of your pocket so we can maintain market share. This is not that bad in the short term, but in the long term it is a terrible way to run a business.
And that is why the airlines are in the plight they are in now. If the airlines are smart, they will add another surcharge in the next month or two and make sure they are profitable and viable, as opposed to being stuck in a death spiral for market share.
March 14th, 2006 at 11:00 am
When an airline does not charge enough for their tickets to cover the cost of doing business, they are essentially saying to their shareholders, you will subsidize the traveler out of your pocket so we can maintain market share.
And when they don’t charge enought for tickets AND ask their employees to take pay cuts, they are asking their emlployees to subsidize the traveler of out their pocket.