Originally Posted by
scubadu
They do if the market will bear it.
If they could arbitrarily increase prices and not have it decrease demand, they'd do it already and increase their profits. They're not holding back on raising prices now because they're nice people who want to help make sure we have lots of money left over for Christmas presents at the end of the year.
Logically speaking, your statement might be true. That said, do you genuinely believe that if fares increase as fuel costs increase, planes will magically have empty seats? If you believe yes, I think you are incredibly naive based on flight loads we've been seeing over the last several years.
Yes, if prices increase fewer people will fly. Hopefully that's obvious to any frequent flier--some trips that you'd be willing to take at a particular price you're not willing to take at a higher price. Whether that translates into empty seats or not depends on how airlines react. They could continue to fly the same planes with the same frequencies on the same routes, in which case there will be more empty seats. More likely they'd cut back capacity, which means that they may be able to raise prices and keep load factors similar but with less revenue and less profit. But there's no scenario in which they just get to jack up prices and get the same number of passengers and the same amount of profit.