Airfares are about to go up, just in time for the summer travel season
Getting ready to fly somewhere this summer? Here’s some bad news: Several big airlines are raising their fares.
American Airlines just increased one-way fares on domestic flights by $5. The airline confirmed the fare hike in an email to CNN Business.
The increase was spotted earlier Thursday by JPMorgan analyst Jamie Baker, who added in a research note that it appeared Hawaiian Airlines has followed American’s lead by boosting fares system-wide.
Baker also noted that Southwest raised rates on several flights, most notably for corporate travelers.
Southwest matched American’s fare increase in some markets, but the airline told CNN Business on Thursday that it did not do so “across the board in any one market.”
Hawaiian was not immediately available for comment about the reported fare increases.
Fare hikes might be a pain for customers, but investors loved the news. Shares of American Airlines surged more than 6% Thursday. Hawaiian and Southwest rose more than 2% and 3%, respectively. Rival air carriers Delta, United and Alaska Air also finished the day with healthy gains.
Wall Street greeted the possibility of higher fares at a time when oil prices are generally falling, as a good sign for future profitability. The hikes could also signal that demand from business and corporate travelers is holding up despite concerns about a slowing US economy, as well as the disruption caused by the grounding of Boeing’s 737 Max planes.
The news of higher fares appears to have caught investors by surprise, mainly because it’s been less than a month since the last industry-wide fare hike.
“We weren’t expecting another increase so soon,” Baker wrote in his report. He added that because fuel costs have been coming down as of late, “we were obsessing over domestic fares much less than usual given what we viewed as a low probability of further increases.”