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Fare Hikes Rolled Back

Here’s how we know things are just screwy in airlineworld:  Continental raised fares on Thursday, a good move considering the airline has complained quite a bit that their revenues have fallen because of low fares.  In response, on Monday Delta lowered their fares, forcing Continental to drop their fares back to previous levels.  Keep in mind, it’s not as if Delta is in any position to be lowering their fares.  I’d like us all to remember this as Delta discusses how much money they’ve lost this quarter.  I know that everyone and their mother has discussed how the fare system is broken, but I think that the continued downward pressure on fares in an environment where no one is making any money is even more nutty than the fare rules (incidentally, I know Delta’s fare changes were supposed to revolutionize the airline world, but if you’ve booked a ticket lately you’ve probably noticed that the rules are hardly less complicated than they used to be).  In sum:  a company that isn’t making any money decided to reduce their revenues as a way of staying afloat.  Whatever.

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  1. I agree it does not make sense lowering fares when you are losing money. However, the industry is stuck in an amazing situation. There are low cost providers that are undercutting the airfares. At the same time, the old line carriers are hemmoraging money. Delta is trying to find the middle ground, and at the same time put the other guys out of business. It is an interesting game of chicken that they are playing.

  2. “In sum: a company that isn’t making any money decided to reduce their revenues as a way of staying afloat. Whatever.”

    Ah, the nostalgia. It reminds me of dot-coms circa mid-2001.