Thu, Aug 15, 2013 - Page 15 News List

Fares have risen with airline mergers

AP, NEW YORK

Airlines have taken their newfound profits and reinvested in new airplanes. That has led to some improvements for passengers, most notably individual TV screens and Wi-Fi. However, those features really just distract fliers from the realities of modern air travel: no pillows or blankets, less legroom and no hot meals.

To deter aggressive discounting, the airlines have set up mutually assured destruction mechanisms known as “cross-market initiatives.” If one airline discounts fares on a route that is highly profitable for another airline, the affected competitor often responds with discounts in another market that hurts the first airline.

The big airlines are all now playing by the same rulebook: They are keeping planes full, cutting unprofitable flights to small towns and not encroaching on the other guys’ territory.

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