Friday, January 25, 2008

Continental doubles fuel surcharge

In a struggle to keep the engines running and show a profit, Continental Airlines announced today a doubling in the fuel surcharge on domestic airline tickets. With the increase, consumers will now pay an additional $40 for domestic airline tickets.

United and American Airlines surprised in the industry last week by charging as much as $50 for fuel surcharges. Although initially matched by other airlines, most of these charges were scaled back or dropped altogether after consumers balked at the higher fees.

The airline industry has been hammered with rising fuel costs. American, United and Delta all came out with 4th quarter losses directly attributed to the cost of fuel. Continental however did show some profit, mainly related to higher revenues from International routes. The fuel surcharges are seen as an immediate way to escape the red and bring the airlines back into profit mode.
Analysts expect other airlines will adjust their surcharges upward in response to Continental's announcement.