Delta Boosts Its Fares and Flights
Jul. 15–Delta Air Lines raised the cap on its priciest domestic tickets by $100 Thursday, blaming stubbornly high fuel prices.
The nation’s third-largest airline increased its top fare for a one-way coach seat to $599 and to $699 for first class. United Airlines matched the fares and other airlines said they were considering it.
Delta introduced the caps in January as part of a major fare restructuring dubbed “SimpliFares,” designed to cut prices for business travelers and reduce the number of fares for the same flight. Some high-end fares dropped as much as 50 percent.
In recent weeks, Delta refused to follow competitors that pushed their walk-up coach fares over the $499 cap, except on “code share” tickets it sold on partner airlines’ flights. But Delta couldn’t hold the line as crude oil prices jumped from $43 a barrel in January to as much as $61 of late, said Paul Matsen, the airline’s chief marketing officer.
“Despite our best intentions to keep the current fare caps in place, we have been forced to find ways to offset this dramatic spike in costs,” he said. “Delta remains committed to providing our customers a simple, affordable pricing structure with fewer restrictions.”
Most people won’t notice the change. Less than 6 percent of Delta’s tickets were sold at the capped price, all at walk-up or three-day advance fares bought primarily for business travelers, the airline said.
Even most full-fare, refundable coach tickets rarely hit $499 one-way at Tampa International Airport because there’s so much low-fare competition, said Debbie Hunter of Bay Pines Travel in St. Petersburg. Delta flew 19 percent of passengers at Tampa International last month, second to discounter Southwest Airlines.
“Tampa Bay travelers will skate by and not feel this, except for one or two (destinations),” she said.
Still, the move was a retreat for Delta, which lost more than $8-billion since the beginning of 2002 and is restructuring to operate more like a lean, low-cost carrier.
Southwest Airlines won’t budge, at least this year, from its $299 one-way fare cap, chief executive Gary Kelly said Thursday during a conference call with financial analysts and reporters.
“We love it when our competitors raise fares,” he said. “It’s no surprise to us that they are (raising) their cap. They live on high fares — that’s who they are.”
Southwest has increased fares three times this year, Kelly said, neither as often nor as much as traditional network carriers.
The five biggest airlines have hiked prices seven times since February in $5 and $10 increments, said Terry Trippler, airline expert for cheapseats.com, a travel Web site. That hasn’t been nearly enough to offset losses from high fuel costs and fares held down by discount competitors.
“It’s been like putting a Band Aid on an artery,” Trippler said. “This is the first major move to really stop the bleeding.”
Other features of SimpliFares aren’t changing, Delta said. The airline will not require a Saturday-night stay for customers to get deep discount fares, although they sometimes must spend a different night at their destination.
Also, the fee for changing a nonrefundable ticket will remain at $50 — half as much as Delta charged before SimpliFares.
Delta shares closed Thursday at $4.07 a share, up 61 cents or 17.7 percent.
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