Last updated: 04:15 PM ET, Tue February 23 2016

Airlines Raise Prices Once Again: But There May Be Ways to Avoid Paying More

Airlines & Airports | Josh Lew | February 23, 2016

Airlines Raise Prices Once Again: But There May Be Ways to Avoid Paying More

Photo courtesy of Thinkstock

Airlines are continuing to raise fares. It is still February and they have already tried to hike prices five times. That is the same number of fare increases that were attempted in all of 2015. 

The latest price hike is the biggest of the year thus far. On Feb. 19, Southwest increased its fares by $10 round trip. This was, in and of itself, not major news. However, it became important a few hours later when all three legacy carriers copied Southwest’s price hike. This kind of price copycatting by the industry’s main players has already happened two times this year. During the two previous hikes, however, round trip fares only rose by $6. 

Price increases becoming significant

Legacy carriers have participated in all three fare increases. That means that fares have grown by $22 round trip. Even people who consider $6 hikes to be insignificant may balk at the $22 figure. 

READ MORE: Why The Latest Airfare Hike Will Not Be The Last

Why is this happening? Travelers expected a break because airlines announced record profits last year and fuel prices are still quite low. Obviously, the cheaper prices have not materialized. But why not at least keep prices steady?

Investors are keen to see airlines increase profits while also cutting costs. One way to do this is to squeeze as much as possible out of every flight. That means that airlines are trying to find the perfect price for their tickets. They want to hit the maximum amount that people are willing to pay without scaring fliers away with fares that are too high. 

Demand will lead to more increases

For many fliers, it is a Catch 22 situation. The only way to lower fares is to stop flying and let airlines know that they won’t pay the new prices. Because demand remains high, however, airlines are likely to keep testing higher and higher fares until that demand starts to disappear. 

According to the airfare research site FareCompare, this latest price increase was not seen on the most competitive routes. Also, mid-week flight deals still appear to be in place, so it is possible to avoid the hikes if you are lucky enough to be flying on a major route or if you can score an off-peak fare.     

It’s possible to avoid the highest fares

The closer you buy your ticket to the departure date, the more likely you will be affected by the fare hikes. Also, people in mid-sized and smaller markets, where there is less competition on a given route, will likely feel the full effect of the 2016 fare increases.

READ MORE: Airfares Drop to Lowest Average Price Since 2010

There is hope in the long term for these smaller cities. Low cost carriers and non-legacy airlines have been expanding in these markets. If that continues, fliers in these places will have more options. For now, though, they may get caught paying higher prices on all but the most popular routes. 

If this latest price hike sticks, then fliers can, unfortunately, expect more increases in the near future.  


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