US Airways and Delta ready to raise fares

Atlanta: Airline travellers should expect higher fares and fewer seats in the coming months after Delta Air Lines and US Airways Group said they would take steps to deal with higher fuel costs.

The two US airlines reported smaller-than-expected losses on Tuesday and their share prices rose, with Delta up 11 per cent, even as some analysts questioned how much longer consumers, paying more for gasoline and food, would tolerate higher air fares.

"We must fully recapture our costs on every flight every day to maintain and improve our earnings performance," Delta Chief Executive Richard Anderson told analysts on a conference call, adding that high fuel was "the new norm."

"Where we cannot get the necessary revenue increases to offset the increased cost of operating the flights, we will remove capacity, particularly in our post Labour Day schedule," he said.

Soaring fuel costs

Soaring fuel costs are plaguing the airline industry as the price of crude oil remains above $100 a barrel. US crude was off 23 cents at $112.05 a barrel on Tuesday. "As you see fuel rise ... over the course of the next few months, you can expect ticket prices to increase," Delta President Edward Bastian said on a conference call.

US Airways President Scott Kirby told analysts that the pricing environment was strong, pointing to improving corporate demand "consistent with underlying demand ... evidenced by another system-wide successful fare increase last week."

US Airways said it would cut capacity in the third and fourth quarters by 1 per cent as it tries to make sure its planes fly full.