Delta airfares on the rise

 

A senior Delta Air Lines Inc. 
executive said more fare increases are needed to counter escalating fuel costs
as the airline pares plans to boost capacity this quarter.

Ed Bastian, president of the
second-largest U.S. airline, said Delta had recouped half of the rise in jet
fuel costs in the last two months through higher fares.

Delta said it planned to add 3 to 5
per cent more capacity this quarter from with last year, instead of the 5 to 7
per cent outlined two weeks ago.

The airline has said it would be
“responsible” about adding flights, though it has said a combination of
capacity discipline, higher industry fares and rising ancillary revenue would
help it weather the latest increase in fuel prices.

The U.S. industry has initiated
four rounds of price increases in the last 45 days, and Bastian said at an
investor conference that another was launched this week. The pressure from
crude oil’s rise has been exacerbated by a widening “crack spread” with refined
jet fuel.

Domestic carriers typically follow
rivals’ pricing moves, though some increases do not “stick” if an airline fears
it will lose market share.

Bastian also said it would be the
latter half of the year before Delta makes a decision on replacing large parts
of its short-haul fleet.

The airline has asked manufacturers
to bid on a potential order for 200 or more narrow-body aircraft.