Continental and United joined
the airfare price increase last night and US Airways joined in this
morning. The only remaining network carrier that has not yet decided to
join is Northwest Airlines.
What’s interesting with this network price increase is that there are
three models. American started the increase on Wednesday night using a
distance-based price increase ($5 for 500 miles, $10 for 1,000 miles,
$15 for 1,500 miles, and $20 for 2,000 miles). Delta used a
flat $10 increase (one-way).
At this point, Continental and US Airways have decided to use the
American pricing model with increases based on flight distance. Delta has a $10 increase and United went with a $5 increase.
I would expect that if Northwest does join this price increase, the
carriers will ultimately gravitate to one of the three models, i.e. a
flat increase or distance-based increase in order to reach a new
pricing equilibrium.
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