So escalating fares are being driven by high oil prices.

I think you're on to something here. It will be interesting to see if the fare changes stick. The load factor has been pretty good, so it's not surprising to see the airline try to coax more money out of the consumer.

Actually, in Continental's most recent SEC filings, the carrier reported that it did not have any fuel hedges in place. There are some instruments that protect the carrier against short term fluctuations. The only carrier of any size that is in a financial position to hedge is Southwest Airlines.

As the financial condition of Continental improves, it may well enter into longer term fuel hedging arrangements.

Great point. I think that Continental is being very clever here. I have been watching fares from LAX for the past few weeks and have noticed a slight increase; the lower classes disappear. It doesn't seem to affect the load. I think that Continental is going to surprise people with the earnings for Q2 this year.

Now it's back down to $317. These rapid-fire changes sure keep you on your toes, eh?

That's weird, it contradicts this source which was a surprise to me:

Excite money

"The company also said that about 17% of its fuel needs are hedged at $63.50 a barrel."

And a question: Does the following mean that they predict the stock to increase to $40?

"Prudential Equity Group kept a $40 price target on the stock and an overweight rating. "Revenues and expenses, ex-items, were generally in-line with our expectations," wrote Prudential analyst Bob McAdoo in a research note."

Continental reports that it has short term instruments to lock in fuel prices, but it does make a point that it doesn't have hedging--the traditional multi-period hedging. Southwest is probably the only carrier that has hedged for some time. Interestingly, Southwest only recently started hedging: the carrier didn't in the early 90's. The majors are subject vagaries of the oil market. Southwest locked in about 70 to 80% of its 2005 fuel needs based on oil at $25 - $27 a barrel; it got fuel based on a $30 to $38 through 2009; as of its last 10-K filing, Continental didn't have such hedging. Hedging gives Southwest a competitive advantage over the legacy carriers. If I were in charge of Southwest, I would try to secure gates in EWR ASAP to take advantage of this position. Both NJ and GA are probably the two largest remaining markets not directly served by this carrier. I am sure that both DL and CO recognize that it's only a matter of time before Southwest invades their hub. EWR will probably be first, once the carrier gets over its issues with the NY ATC. The legacy carriers are stuck with high fuel costs for now.

BTW, this is Southwest's hedging schedule (from their annual report).

'05 86% @ $26
'06 65% @ $32
'07 45% @ $31
'08 30% @ $33
'09 25% @ $35

Briiliant gamble that paid off.

Thanks for the information; Southwest is definitely in good shape. They did assume a risk, but it looks like it will pay off for them. Actually, it's probably not that much of a 'real' risk. Oil was artificially depressed in late 90's/early 00's: Southwest did a very smart thing.

It's going to be interesting to see their fare strategy as they become more and more exposed to the market price of fuel. I don't see that they will have a choice put to start passing along the fuel increase to consumers. It's hard to know what will happen--if consumers will accept an increase in price and continue flying unfettered. Whatever happens, I do expect to see Southwest make an end run at EWR in the next six to 24 months--either directly or indirectly.

Spent some time on Dream Maps yesterday and again today. Couldnt find CO anywhere in range from what the others were charging.

Even worse most of the time DM didnt even have a listing for CO what so ever. Good thing I got most of my miles for requalifying for Plat under my belt in Jan & Feb. looks like JetBlue will be getting some of my biz along with AirTrans or AA.

If it stays like this then ill probably not be Plat in '08.

That's the sticky part about air travel. A lot of it is discretionary -- not just leisure, some business too, so when prices rise, we lose some of that, which is why demand needs to be watched closely.

Leisure travellers can bag a vacation if fares are too high, or go elsewhere, or drive somewhere local (an hour or two in the car is cheaper than any air travel x 4 pax).

Similarly, some biz trips have to happen, and they will; others you can be on the fence about it (e.g., it would be nice to meet with that client in person, or it would be nice to attend that convention), and the fare could swing it one way or another.

So every price increase, regardless of cause, will have a somewhat reduced demand. The question is whether remaining demand at increased price levels will be net advantageous.

Looks like the fares are creeping back down at least for my every other week route of EWR - ORD - EWR. At the start of the week, cheapest fares for July and Aug was 282 + tax and yesterday they went to 252+ and today they are 232+. In Sept they went back down to 182+ which is 5 more then when they started raising them. Anyone else notice?

Around that date, DCA-CLE jumped from $178 to $358, where it's stayed. It was $148 earlier in the spring, and I put off buying tickets. As it crept up, I finally said ok, better get them now. Lucky I did!

Just overnight though, the fare I was looking for DCA-LGW and then EDI-DCA dropped $60...of course, I have to go on a 752 instead of a 777. Oh well.

Im wondering is the fare going up or are the fare basis available changing.

Either way it will cost more for the tkt , the difference being that CO instead of raising the fare of say a "T" simply elimates any "T" fare from being sold so that will mean that say an "N" is now the cheapest you can buy but it costs more then the "T".

I say this cause I saw that for a tkt for an Intl trip I have purchased awhile ago,had "O" as the lowest and that was $650 more than I paid and the flight is far from full and the other week had U & I available for sale. I know they could have sold them out but this happened as Oil was hitting the $75 area, I figured that CO instead of doing a price increase that they would have to announce , simply did away with some of the lower fares so in effect they did do a price increase and didnt have to say anything since the 'fare basis' itself didnt cost any more , it simply wasnt available any longer. So they in effect did do a price increase

I'm not sure if I'm posting this in the correct area... however I wanted to travel from ewr to mke this Friday and return on Monday... last minute thing... unfortunately the ticket is over $600. There are however 10 seats available according to the seating chart. Can I just show up to the airport on Friday and get a better deal? I've never done that before and am not sure how it works.... If anyone has any suggestions, thank you in advance for all your help!