"nobody" wrote in message
news:43292E0F.A3646D2D@nobody.org...
> John Mazor wrote:
> > Overcapacity is causing the cut-throat pricing of airline tickets, so
> > carriers often cannot pass along cost increases. Look how long it took
them
> > to dare to impose modest price increases to partially offset rising fuel
> > costs.
>
> They have to wait until the healthy carriers's fuel hedges run out and
> these carriers are then forced to increase their prices.
>
> I believe that Delta had been hoping very much to last until Southwest's
> $25/barrel hedges ran out in early 2006 if I remember correctly, at
> which point, airlines in the USA would be able to raise fares systemwide
> and stop profusely bleeding money.
>
> Southwest is in for a very rude awakening when its fuel hedges run out
> and it needs to start paying going rates for fuel. Being a real
> business, they will not hesitate to raise ticket prices, unlike legacy
> careriers who have traditionally set fares without considering actual
> operating costs at all.
Southwest is locked in at $32/barrel for 65% of their fuel needs in 2006,
$31/barrel for 45% of their fuel needs in 2007, $33/barrel for 30% of their
fuel needs in 2008, and $35/barrel for 25% of their fuel needs in 2009. So
they have a little breathing room.
Paul Nixon
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