Continental Airlines Increases Fares to Help Cover High Fuel Costs
Feb 27, 2004, 7:41 am
#1
Original Poster
Join Date: Dec 2000
Location: New York, NY
Programs: UA 1K, AA EXP, Hilton, Marriott Rewards,SPG
Posts: 1,134
Continental Airlines Increases Fares to Help Cover High Fuel Costs
HOUSTON, Feb. 27 /PRNewswire-FirstCall/ -- Due to persistently high fuel costs, Continental Airlines (NYSE: CAL) today implemented a fare increase of $5 on one-way tickets and $10 on round-trip tickets.
The fare increase applies to tickets for travel in the 48 contiguous U.S. states, and both restricted and unrestricted fares are affected.
"Fuel prices -- which we can't control -- are the highest we have ever seen," said Jeff Misner, senior vice president and chief financial officer. "Meanwhile, Continental travelers in 2003 paid the lowest fares since 1994. This fare increase is a step toward matching fares with the cost of providing air travel in this environment."
SOURCE Continental Airlines
Feb 27, 2004, 9:11 am
#2
Suspended
Join Date: Dec 2001
Location: new york, ny, usa
Posts: 13,536
<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by joebeenyc:
"Fuel prices -- which we can't control --</font>
"Fuel prices -- which we can't control --</font>
Feb 27, 2004, 9:25 am
#3
Original Member
Join Date: May 1998
Location: Houston, Texas, TEXAS
Posts: 1,510
Well, since there are a lot of ENRON traders that could help them a bit with hedging on jet fuel, one would think they would hedge just a tiny bit. 
------------------
"The Eyes of Texas Are Upon You"
------------------
"The Eyes of Texas Are Upon You"
Feb 27, 2004, 9:48 am
#4
Join Date: Oct 2003
Location: The Woodlands, Texas
Programs: CO-Plat, HH-Diamond, MR-Gold, SPG-Gold
Posts: 182
They hedge a ton, and they are quite good at it.
If I remember correctly, I saw Continental put something out saying that for each dollar a barrel of crude goes up, it costs them an additional $20 million a year.
As far as I'm concerned, while I may not like it, raising fares based on fuel makes a lot more sense than some other reasons out there for raising fares.
If I remember correctly, I saw Continental put something out saying that for each dollar a barrel of crude goes up, it costs them an additional $20 million a year.
As far as I'm concerned, while I may not like it, raising fares based on fuel makes a lot more sense than some other reasons out there for raising fares.
Feb 27, 2004, 10:21 am
#5
Join Date: Apr 1999
Location: Homosassa, FL & Ringwood, NJ -UA-G(Lifetime); SPG-Plat (Lifetime)
Posts: 6,120
Well, today is Friday. And airlines float these trial baloons on Friday to see it the others will all go along. If EVERYONE has not matched by Sunday, you can expect CO to withdraw this change promptly.
Now would be a good time to wait and NOT buy a ticket.
Now would be a good time to wait and NOT buy a ticket.
Feb 27, 2004, 11:43 am
#6
Join Date: Oct 2001
Location: DTW
Programs: BW Diamond, Choice Plat, National Exec Elite
Posts: 3,120
Fuel surcharges are like "temporary" tax increases. They never really go away. Remember, CO simply rolled the previous fuel surcharge into the fare when the price of fuel went down. Jet fuel currently sells at around 98 cents/gallon, which is what CO would pay if they weren't hedging. That price is 21% BELOW the price this time a year ago.
------------------
Proud to be CO free!
------------------
Proud to be CO free!
Feb 27, 2004, 12:09 pm
#7
FlyerTalk Evangelist
Join Date: Sep 2002
Location: Between AUS, EWR, and YTO In a little twisty maze of airline seats, all alike.. but I wanna go home with the armadillo
Programs: CO, NW, & UA forum moderator emeritus
Posts: 35,415
<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by duxfan:
Jet fuel currently sells at around 98 cents/gallon, which is what CO would pay if they weren't hedging. That price is 21% BELOW the price this time a year ago.</font>
Jet fuel currently sells at around 98 cents/gallon, which is what CO would pay if they weren't hedging. That price is 21% BELOW the price this time a year ago.</font>
Feb 27, 2004, 1:09 pm
#8
Join Date: May 2003
Location: New York, NY
Programs: DL Plat
Posts: 83
See this article regarding hedging on fuel costs - says Continental and Northwest aren't hedged at all for 2004:
http://www.thestreet.com/_yahoo/mark.../10145979.html
http://www.thestreet.com/_yahoo/mark.../10145979.html
Feb 27, 2004, 1:20 pm
#9
Join Date: Oct 2001
Location: DTW
Programs: BW Diamond, Choice Plat, National Exec Elite
Posts: 3,120
[quote]<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by xyzzy:
Well if they were hedged in the past and are not now, that might make it true. OTOH, CO has been known to fabricate the truth...
------------------
Proud to be CO free!
Then how are these "...The highest [prices] we have ever seen...."
</font>
------------------
Proud to be CO free!
Feb 27, 2004, 1:50 pm
#10
Join Date: Apr 2000
Location: Houston, Texas
Programs: CO Silver
Posts: 2,600
NW isn't matching so this balloon isn't going to float.
Feb 27, 2004, 2:35 pm
#11
Join Date: Oct 2003
Location: The Woodlands, Texas
Programs: CO-Plat, HH-Diamond, MR-Gold, SPG-Gold
Posts: 182
NW is matching, but not on all routes. The fact that they are matching at all and not taking the "Ralph Nader" approach (spolier)
makes me believe that this will stick.
Feb 27, 2004, 2:48 pm
#12
Join Date: Aug 2002
Location: EWR
Programs: CO Plat, AA Gold, UA Premier, Hertz #1 Gold, Hyatt Diamond, Loews Gold, Marriott Gold, etc. etc. etc
Posts: 621
CO was hedged all through 2003, now that 2004 has come they took a gamble that prices would drop and decided to return to a conventional format on the assumption that prices would drop. They are dropping, but have not slipped below their negotiated rate for 2003. A friend of mine specializing in the oil industry said this was a rather expedient move as jet fuel prices are expected to go down somewhat (below the 2003 hedge), but at the moment, fuel is costing CO more to operate this year on slightly higher revenue with fluctuating yields.
------------------
Dave
------------------
Dave
Feb 27, 2004, 6:19 pm
#13
FlyerTalk Evangelist
Join Date: Sep 2002
Location: Between AUS, EWR, and YTO In a little twisty maze of airline seats, all alike.. but I wanna go home with the armadillo
Programs: CO, NW, & UA forum moderator emeritus
Posts: 35,415
<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by IAH_FLYER:
NW isn't matching so this balloon isn't going to float.</font>
NW isn't matching so this balloon isn't going to float.</font>
http://www.dfw.com/mld/dfw/business/8057887.htm
<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Airline fares up $10 a ticket
By Trebor Banstetter
Star-Telegram Staff Writer
Citing rising fuel costs, most of the major airlines hiked fares by $10 on round-trip tickets Friday _ and this time, the price increase just might last past the weekend.
It was the first time since February 2003 that the major airlines cooperated on an across-the-board price increase. Typically, such fare increases are retracted if one of the large carriers doesn't match the increase.
Fort Worth-based American Airlines has tried twice since then to raise fares nationwide, but always reduced prices within a few days after a key rival didn't follow.
"I think this one is going to stay on the books," said Terry Trippler, an airline pricing analyst with Cheapseats.com, an Internet travel service. "The fuel prices are killing these guys."
This time, the increase was instigated by Houston-based Continental Airlines, which raised prices Friday morning. Soon American, Delta Air Lines, United Airlines and JetBlue Airways all followed suit.
Northwest Airlines raised fares on most, but not all, of its routes. The only large airlines that had not signed on by late Friday were Dallas-based Southwest Airlines and US Airways. Those two carriers are locked in a pitched battle in Philadelphia, a US Airways hub that was recently invaded by discount king Southwest.</font>
By Trebor Banstetter
Star-Telegram Staff Writer
Citing rising fuel costs, most of the major airlines hiked fares by $10 on round-trip tickets Friday _ and this time, the price increase just might last past the weekend.
It was the first time since February 2003 that the major airlines cooperated on an across-the-board price increase. Typically, such fare increases are retracted if one of the large carriers doesn't match the increase.
Fort Worth-based American Airlines has tried twice since then to raise fares nationwide, but always reduced prices within a few days after a key rival didn't follow.
"I think this one is going to stay on the books," said Terry Trippler, an airline pricing analyst with Cheapseats.com, an Internet travel service. "The fuel prices are killing these guys."
This time, the increase was instigated by Houston-based Continental Airlines, which raised prices Friday morning. Soon American, Delta Air Lines, United Airlines and JetBlue Airways all followed suit.
Northwest Airlines raised fares on most, but not all, of its routes. The only large airlines that had not signed on by late Friday were Dallas-based Southwest Airlines and US Airways. Those two carriers are locked in a pitched battle in Philadelphia, a US Airways hub that was recently invaded by discount king Southwest.</font>
Feb 27, 2004, 10:22 pm
#14
Join Date: Oct 2002
Location: Houston
Programs: AA EXP; Hyatt Globalist; Marriott Titanium, Hilton Diamond, UA 1.56MM (fmr UA1K)
Posts: 5,770
Continental seems to be the 'industry leader' once again.
Feb 28, 2004, 3:34 pm
#15
Join Date: Mar 2001
Location: IAH
Programs: UA 1K/*G
Posts: 2,397
<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by duxfan:
Jet fuel currently sells at around 98 cents/gallon, which is what CO would pay if they weren't hedging. </font>
Jet fuel currently sells at around 98 cents/gallon, which is what CO would pay if they weren't hedging. </font>
I'm not doubting you, I just see people pay $3/gal for private aircraft and although I'm sure co has quite the discount, that seems like a huge discrepency.