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US Carriers Hike Base Fares by $2 as Fuel Prices Drop

Airlines based in the U.S. raised their domestic one-way fares by $2 on many routes last week in the wake of lower fuel prices.

Despite a decrease in fuel costs, industry analysts report that U.S. airlines have raised base domestic one-way fares by $2 since last week.

Led by JetBlue Airways, which raised the fares of a small number of flights on October 16, Delta Air Lines responded by raising their fares that night, according to a report published by Reuters. Southwest Airlines, United Airlines and American Airlines all followed suit the following day.

“We matched an industry increase and expanded it to additional markets,” Delta spokesman Anthony Black told Reuters.

Typically, airlines raise fares in response to higher fuel costs. According to Reuters, the “hikes suggest that airlines do not intend to pass along savings from the decline in jet fuel prices to their customers.” However, an article from CNBC reports that higher base fares don’t necessarily mean passengers will pay more because airlines regularly run promotions and adjust prices based on demand.

In response to the fare increases, stock prices rose an average of 5 percent for Delta, American and United. Reuters speculated that the news “may quell investors’ concern that airline revenue will fall if the Ebola virus discourages people from traveling.”

“Ebola fears do not appear to be hurting demand for flights and the news about the end of the quarantine period for dozens of Texans with no new infections may continue to calm lingering fears,” Rick Seaney, head of FareCompare.com, told USA Today.

Of the 20 attempted fare hikes since January, this was the first successful one in October and the fifth of 2014.

[Photo: iStock]

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