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Spirit Latest Carrier to Increase Its Fares: Domestic Flights Up $5 Each Way

Posted on: Friday, 21 April 2006, 06:00 CDT

By Jewel Gopwani, Detroit Free Press

Apr. 21--Low-fare carrier Spirit Airlines Inc. on Thursday increased fares at least $5 each way and up to $20 on international flights, joining airlines across the country in fuel-driven price hikes.

"Everybody's feeling it, and we're feeling it as well," said Barry Biffle, chief marketing officer at Miramar, Fla.-based Spirit. "We just need to try to adjust fares to try to reflect the fuel costs, which is our No. 1 expense."

Spirit is Detroit Metro Airport's second-largest carrier, with 21 daily flights. It handled 5.3% of Metro's passenger traffic in February.

Spirit's increase is comparable to fuel-driven fare increases across the industry, as airlines try to offset fuel high fuel prices while attempting to draw travelers with spring fare sales.

On Tuesday evening, American Airlines Inc. increased fares $5 each way due to fuel costs, a move matched by other carriers including Northwest Airlines Inc., Metro's largest carrier.

In March, low-fare carrier Southwest Airlines increased most fares by $2 to $4 each way and its highest fares by $10 each way because of fuel.

Southwest is known for adeptly hedging fuel prices, locking in lower prices for future purchases. For the rest of 2006, Southwest will buy more than 70% of its fuel consumption at $36 a barrel.

For airlines that are not hedged, a barrel of jet fuel, including refining charges, cost $89.55 at the beginning of this week, according to the Air Transport Association, an airline industry trade group.

During the first three months of 2006, the price of crude oil averaged at $63.27, a 27% increase compared with the year before. When refined into jet fuel, the price averaged $1.85 per gallon, also a 27% increase, compared with a year ago, the association said.

For 2006, Spirit has hedged 25% of its fuel needs at prices ranging from $50 to $60 a barrel, Biffle said.

In addition to hedging, Spirit's fleet of new Airbus aircraft made its operations more fuel-efficient. For a flight from New York to Ft. Lauderdale on an Airbus 319, Spirit spends $39 per passenger on fuel, Biffle said. That's $10 less than it would cost per passengers on one of Spirit's remaining 11 MD80 aircraft.

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Source: Detroit Free Press

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