Aviation Airlines have raised fares 3 times this year, but with little impact By Robert Silk / February 29, 2016 Share 1 Southwest Airlines initiated the latest hike, $10 roundtrip. Photo Credit: Shutterstock -- While U.S. airlines have already hiked fares three times since the start of 2016, some analysts last week questioned if such hikes have any real-world impact. “They are just as easily reversed on various routes without much fanfare, so the average overall fares might actually go down,” George Hobica, president of the website Airfarewatchdog, wrote in an email to Travel Weekly last week. “Let’s see what consumers actually end up paying for tickets, not what [price] the airlines attempted to sell them for.”The latest hike, amounting to $10 roundtrip, was initiated on Feb. 19 by Southwest Airlines. Delta, United and American matched the increase later that day, and the new prices were not rolled back, according to the website Fare Compare. The latest hike came on the heels of a $6 roundtrip increase initiated by Delta on Jan. 4 and another $6 increase initiated by JetBlue on Feb. 10. In total, the three hikes add up to $22 per roundtrip. By comparison, U.S. carriers initiated just two successful fare hikes in 2015.Two other attempts to raise fares in February failed, according to Fare Compare. For the largest and most recent hike, Fare Compare noted that business travelers, those who purchase tickets at the last minute and those who live in smaller markets would shoulder most of the increase. Hikes were not detected on discounted fares or on hotly contested routes.Despite January’s increase, fares were still down 1.7% that month compared with 2015, according to the Consumer Price Index, but they increased a seasonally adjusted 1.2% between this past December and January. U.S. carriers are hiking ticket prices even as they are seeing record profits amid tumbling oil prices. American recorded net income of $6.3 billion last year, up 50% year over year. Southwest's net income increased 92%, to $2.18 billion, in 2015. Delta reported net income of $4.5 billion in 2015, up from $659 million a year earlier. And United reported $4.2 billion in pretax income in 2015, its highest ever. Accounting for tax benefits the airline claimed from previous losses, net income came to $7.3 billion, up from $1.1 billion in 2014.In the meantime, oil prices sat at $29.64 per barrel on Feb. 19, the day of the latest airfare hike, down from $36.76 at the start of the year. Oil prices dropped 44% in the year that preceded Feb. 19.The price increases amid ever-falling operating costs have some consumer advocates crying foul. Charlie Leocha, chairman of the consumer group Travelers United, placed part of the blame on government regulators, who approved the five mergers since 2005 that have consolidated the number of major U.S. carriers from nine to four. As a result, he said, consumers are at the mercy of the remaining airlines. “It’s beyond ludicrous for every single airline to have reported record earnings and at the same time they’re raising prices,” Leocha said. But analyst Brett Snyder, who writes the blog Cranky Flier, said that airlines are looking at demand, not the price of jet fuel, when they consider ticket prices. “My guess is that Southwest is feeling pretty bullish right now and think they can get more money out of it,” he said, alluding to the carrier that initiated the most recent fare hike. In his blog post on the hikes, Fare Compare’s Rick Seaney argued that shareholders expect airlines to squeeze every dollar of profit they can out of their operations.“At the moment, it appears the economic winds [plus steady demand for travel] are keeping those sails inflated, at least domestically,” he wrote. But an analysis conducted this winter by the predictive airfare app Hopper suggests that at least on routes with significant competition, fare hikes have little impact.Airlines sell tickets under many different fare codes, Hopper’s chief data scientist Patrick Surry wrote in the study. So, even if they raise ticket prices across the board on those fare codes, it doesn’t mean the average sales price will go up. The reason is that airlines adjust which price codes they put up for sale on a continual basis. If a fare hike of $6 is put into effect but tickets aren’t selling well enough under one fare code, an airline can swap it out for a fare code that might be $6 or more cheaper. For its analysis, Hopper looked at the Boston-Los Angeles route, which is flown by United, Delta, Virgin America, Alaska and JetBlue.Over the course of one 24-hour period in February, airlines sold roundtrip May 1 to May 8 tickets on the route under 231 economy fare codes, or price points. So the mix of fare codes sold, rather than the specific price of each fare code, determined what consumers paid. In the case of the Boston-LAX route, the Hopper study showed that after the $6 fare hike on Jan. 4, the average fare did tick up slightly, though the lowest available fare remained steady. But in the aftermath of the Feb. 10 fare hike, real Boston-LAX prices actually took a plunge of approximately $20 on each of the five carriers except United. Despite the two fare hikes, the lowest available fare for the May 1 to 8 Boston-LAX route dropped from $398.20 in early December to $372.20 in mid-February, and at the latter date all five carriers were offering that same fare.“It’s clear that the price list changes don’t have much impact on the ultimate price the consumer pays,” Surry wrote.