Fare Raise!

Attention K-mart - er, Orbitz/Travelocity - shoppers! Be prepared to shell out more dough to buy a plane ticket!

Southwest Airlines announced that it will raise fares $10 for a one way ticket as it tries to offset $600 million in additional fuel costs. And don't think it's just Southwest. It's Delta, too. And Northwest. And Continental. And US Airways. And American. And United. Even Alaska jacked up the fares by ten bucks on continental flights.

This is the second round of fare-raising from Southwest, a low fare carrier. Well, those low fares won't be as low.

"There comes a point where you have to be realistic," said Southwest spokesman Ed Stewart. "Even the most savvy of analysts would agree that fuel is something we just have to keep an eye on."

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Alaska Airlines Gets Rid of Older Jets

Seattle-based Alaska Airlines is going to get rid of its MD-80 aircraft (pictured) to make way for Boeing 737s, a type of aircraft that the airline already has in service. 26 MD-80s are leaving, and 39 Boeing 737-800s are joining the fleet. Delivery is between now and 2008.

Savings will apparently be about $115 million per year as fuel, operating, and maintenance costs plummet. Although the number of aircraft operated by Alaska will only increase by 4, compared to the beginning of the year, its capacity will increase by 18%.

This is a smart move for Alaska. Sure, the company is going to have to go through two pre-tax charges of $130 million to $150 million, but the savings clearly win in the long run. Interesting to note that Alaska, which is a seudo-low cost carrier, is going to simply its fleet to just Boeing 737s - something that competitor Southwest Airlines has always done.

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USAir CEO Declines 770K Bonus

The CEO of the US Airways Group, Doug Parker, said that he declined a $770,000 bonus last year and won't accept any bonuses until his airline becomes profitable.

Parker, the CEO of America West Airlines, oversaw the merger/takeover with US Airways in September 2005. The combined airline kept the US Airways name.

Why would Parker walk away from about three-quarters of a million dollars? He said it would be wrong for him to accept bonuses until US Airways employees get payments under a profit-sharing plan. "I was personally somewhat conflicted because I know full well our team earned and deserved it," he said. "But it seemed the right thing for me to say I'll decline the bonus." The bonus was tied to his performance when he was at the helm of America West.

Executive bonuses have been problems at other airlines, especially United and American, where then-CEO Don Carty was forced out in February 2003 after it became known that he accepted big bonuses when the airline was forced to slash the pay of others drastically.

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Northwest Buys Indy Air's Certificate

Northwest Airlines is going to pay $2 million for the operating certificate of former low-cost carrier Independence Air. Indy Air, which was auctioning it off, had other bidders for it but said that Northwest's offer was the highest.

The FAA requires each airline to have an operating certificate. It's easier to buy someone else's than going through the process of creating one from scratch. Northwest is most likely going to use it in a new subsidiary for regional routes, one that flies planes with 51 to 76 seats. NWA also recently reached a tentative deal with its pilots that allows the airline to start work on the subsidiary.

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DEN Traffic Up After Southwest's Entrance

Denver International Airport reported an 8.3% increase in passengers in January after Southwest Airlines began service to the airport. That's a 300,000 person increase compared to the time a year before.

"Southwest certainly was a part of the increase in January," airport spokesman Steve Snyder said.

United has roughly 58% of the traffic at DEN and reported a 4% rise in traffic. Hometown carrier Frontier has about 20% of the traffic and reported a 16% increase at the same time. Denver carried 3.5 million passengers last month in all.

Like everyone else is saying, I think Denver is seeing an increase from Southwest, but it's too early to see whether this trend will stick or if it's just a temporary increase. This isn't good news, however, for United or Frontier. Almost everyone in an existing airline's a bit scared when Southwest comes to town.

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Aeroflot Might Snap Up Rivals

Interesting news out of Russia. The Moscow Times is reporting that Aeroflot is considering buying government stakes in rival government-owned carriers with newly issued shares. That's according to Lev Koshlyakov, deupty CEO of Aeroflot. The board meets in June to decide whether to issue more shares or not.

Altough Koshlyakov said that the plan would "expand the company's activities", he denied a report that stated that Aeroflot's real plan would be to bring the government's shares into the Aeroflot family - and thus create a near-monopoly. Koshlyakov wouldn't say which shares Aeroflot might purchase.

The report said that Aeroflot wanted state-owned Pulkovo, Rossia and Dalavia to be merged directly into Aeroflot, and for the government's 51% stakes in KrasAir and Vladivostokavia and 25% stake in Siberia Airlines (also known as S7). The apparent source for this info comes from an unidentified member of Aeroflot's board. This would mean that, according to some analyists, Aeroflot's current 20% share of the Russian market would increase to over 50%.

Some also say that the government is putting pressure on Aeroflot to consolidate the industry. This would make sense, since Russian President Vladimir Putin last month announced an order that would merge the country's aircraft manufacturers into one entity.

In my opinion, I think that this Aeroflot-led consolidation might occur, especially if it's with the government's blessing. After all, Aeroflot announced last week that profits fell 50% to 3.052 billion rubles ($109 million), even though income increased 10% but costs grew almost 15% as well.

According to the Times, there are 185 airlines in Russia. Profits are souring for almost all as fuel prices increase and since many operate Russian-built aircraft with poor fuel efficiency, this makes the problem worse.

Consolidation is nothing new to the airline industry, but it is in Russia - especially on such a grand scale. It will intersting to see how this plays out in the future.

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American Eagle Won't Charge for Drinks

American Eagle, a division of American Airlines, announced yesterday that it will stop charging $1.00 per soft drink, which it did do on some California flights since January. Spokesperson Dave Jackson: "We didn't sell a lot and we also got feedback from our customers saying they'd prefer that juices and sodas be complimentary." No, really? Gee, imaging having to shell out a dollar for a can of Coke on American - especially when they don't offer anything else for free.

I've already written about my experience on Northwest Airlines last summer. They charged for everything - peanuts, etc. - but not drinks. American Eagle will continue something similar: charging $1.00 for cashew nuts and $5.00 for pillow-and-blanket sets which the passengers can keep. Not only that, but the airline said it was looking to "roll them out further".

Now it's common practice for low cost carriers elsewhere - especially Europe (hint: Ryanair) - to charge for everything. On Ryanair, the only thing that's free is the air. Water is extra.

And American's excuse for trying to charge for soft drinks: movie theaters profit from the sale of drinks and snacks.

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