News Column

United's Fare Hike Sticks Mostly on East Coast

Jan. 19, 2013

Gregory Karp

United, airfare, airlines

United Airlines' attempt at an fare hike this week was partially successful, with price increases sticking mostly on the East Coast.

United on Wednesday afternoon began raising prices on most domestic routes, according to FareCompare.com. The hikes were based on distance traveled, ranging from $4 to $20 roundtrip.

Over the next two days, other airlines slowly followed, but by late Friday had partially rolled back those hikes. That's because Southwest Airlines, which often determines whether fare hikes stick, matched only those on routes that overlapped with fellow discounter JetBlue Airways.

In the end, fare hikes for major airlines, United included, mostly stuck on routes that JetBlue flies, which are concentrated on the East Coast.

In the hypercompetitive airline business, fares typically rise when one carrier raises prices and other airlines follow. If competitors do not follow, the initiator usually drops back its fares.

"It's all about staying at competitive equilibrium," FareCompare cofounder Rick Seaney said. "People will switch one airline to another for $1, and that's just the way it works."

Seaney said Friday he would describe the latest attempt as partially "sticky." "This one is like a Post-it note -- not super-sticky but sticky enough," he said.

United also attempted a fare hike during the first week of January that failed "after tepid support from the airline's competitors," according to FareCompare.com.

In 2012, airlines attempted 15 fare increases, of which seven were successful, according to Seaney.

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