Holiday Airfare Increases as 3Q Results are Announced

Los Angeles International Airport — Fares for most major airlines have increased $4 to $10 one-way. Reuters

Unfortunately for holiday travelers, airlines have once again hiked up their prices just in time for the rush. The announcement comes on the tails of third quarter financial results and high jet fuel costs.

On Tuesday, Delta Air Lines announced that they would be increasing ticket prices on domestic one-way trips by $4 to $10. United Continental, JetBlue, Virgin America, and others all matched the increase within 24-hours.

The good news is that often times fare increases don't stick, as one airline doesn't want to price themselves higher than competitors.

Airfare-hike attempts stick when the bulk of domestic airlines match within a few days - otherwise they are forced to roll back as their ticket prices become uncompetitive, FareCompare CEO Rick Seaney said on his Web site.

Airlines have already tried to increase prices over 17 times this year and over half have failed, when other airlines didn't join in. Those that have stuck, increased the average domestic cost by $12 this year.

On Wednesday, Southwest and subsidiary AirTran matched the increase by raising one-way trips $2 to $5, a sign that this price increase may be here to stay.

This attempt occurs as most U.S. airlines are set to announce third-quarter profits amidst the backdrop of choppy economic headlines and stubbornly high jet fuel prices, said Seaney.

It is rare that airlines hike prices in October and November, but it appears that demand is driving prices up. Holiday airfare is expected to be between 10-20% higher than last year.

Airlines are now in a position to raise prices; by cutting the amount of flights they are now flying fuller planes. These higher ticket prices show a strong sign of demand to airline investors looking to turn a profit.

Most analysts and investors have been surprised at how well the airline industry has managed its capacity this year, Helane Becker, an analyst with Dahlman Rose & Co., told Reuters.

Higher demands have not been able to pull American Airlines parent company AMR Corp. away from looming bankruptcy. On Wednesday, AMR announced it had lost $162 million in the third quarter. AMR CEO, Gerald Arpey, blames the loss on higher jet fuel costs.

Southwest has posted similar 3Q results, with a loss of $140 million. The company had pre-bought fuel as insurance against volatile prices, but when crude prices dropped by one-fifth over the summer, the company also lost. Unlike AMR, Southwest's fourth-quarter looks as though it may see improvement.

On Tuesday, Southwest launched a 72-hour sale on off-peak holiday travel with aggressive prices. The sale has been widely matched by competitors, giving winter travelers a great opportunity to get away.

Passengers looking for a deal during the holiday season should book as early as possible, before fares have a chance to increase anymore. The last-minute deal usually doesn't apply to holiday travel and waiting can often mean being left without a seat.

Try to avoid flying on the Wednesday before or Sunday after Thanksgiving, as they often have the highest prices of the year. The cheapest dates for holiday travel are actually Thanksgiving and Christmas day, booking on these days can mean a great deal and avoiding holiday travel crowds.

Other tips for the best price, include flying hubs or major airports and cutting out additional costs, such as packing only a carry-on.