Neha Jain: http://philippinesaviationnews.blogspot.com/ m9

1. U.S. airlines raise fares as fuel costs rise; Southwest, United join a trend started by Delta

Southwest and United are the most recent U.S. Airlines to raise fares in response to rising fuel costs, continuing a trend started by Delta Airlines.
Associated Press airlines writers David Koenig and Joshua Freed report fuel has become the largest single expense for most airlines.
Flying less is one way they can offset it. Raising fares is another — and they’ve been doing that aggressively.
“For the most part the rates haven’t jumped to where you could say they have tripled, or even doubled, but they are at some of their highest in months,” said Peggy Riley, a professional agent with Dolphin Vacations in Grand Rapids with more than 30 years in the industry.
“If someone hasn’t looked at fares, including all taxes in a few months they might be a bit surprised,” she said.
Riley, who tracks airline rates for The Grand Rapids Press, said lately there have been a lot less offers of discounts than most customers are used to.
“So waiting for a sale may now not be the best way to plan a trip unless you are very flexible and can change your complete plans should you not get that lower fare you were hoping for,” Riley said.

Peggy Riley
AP's Koenig and Freed report jet fuel prices have risen more than 50 percent in the past year to more than $3 a gallon, although most airlines have offset some of the increase through hedging — in effect, paying extra to lock in the top price they’ll pay for some of their fuel.
The latest price increase started early last week. Delta Air Lines Inc. -- the largest carrier at Gerald R. Ford International Airport in Grand Rapids -- tried to raise many fares by up to $20 per round trip. But, other big airlines sided with a $10 increase started by AMR Corp.’s American Airlines.
Low-cost airlines JetBlue, AirTran and Virgin America also raised prices, virtually assuring that the increase will become permanent, he said. AirTran also operates out of Grand Rapids.
Then, on Monday, United Continental Holdings Inc., the world’s biggest airline company, scrapped its 2011 growth plans and said it will cut unprofitable routes because of rising fuel prices. The airline also said it may remove less fuel-efficient planes from its fleet.
Over the weekend, Southwest Airlines Co. joined the $10 increase started by other airlines on many domestic round-trip fares. Southwest’s increase may have ensured success for a price hike by major airlines that seemed to be faltering. Southwest carries more U.S. passengers than any airline and wields great influence over prices.
It’s the sixth time airlines have raised fares already this year. FareCompare.com CEO Rick Seaney says leisure travelers may now have to pay $260 for a ticket that cost $200 back on Jan. 1.
The airlines say they need the money.
“Fuel prices are up every week and the fare increases aren’t keeping pace with fuel cost increases,” Southwest CEO Gary C. Kelly told The Associated Press.

2. Airline fuel costs lift nearly 20 percent

Airlines’ fuel costs soared by nearly 20 percent in January, according to data compiled by the Bureau of Transportation Statistics.
The cost per gallon for U.S. airlines’ scheduled services was $2.62, up 19.6 percent from $2.19 in January 2010. Fuel expenses were up more than 14 percent compared with December.
The price of oil has jumped to around $100 a barrel in recent months because of factors such as the U.S. economic recovery and political turmoil in the Middle East. Already this year, carriers have tried to counter those rising costs with six broad-based attempts to increase domestic airfare, meeting with varying degrees of success.

3. Cathay profit triples amid oil fears

Cathay Pacific has reported strong full-year earnings - but at the same time warned about the dangers of rising oil prices. The airline booked a net profit of just over HK$14-billion last year - triple the 2009 result of HK$4.69-billion.
But its chairman, Christopher Pratt, said surging oil prices loom as a big challenge for the airline. "Our results would be adversely affected, and very quickly so, by a return to recessionary economic conditions," he said.

"Demand is at present expected to remain strong in 2011, but this expectation could be undermined if the current (or any higher) level of prices were to reduce global economic activity," he added.

Cathay also announced that it would acquire 27 planes from Airbus and Boeing in a deal worth as much as HK$51-billion. The airline said it had struck a deal with Airbus for 15 A330-300s and a separate agreement with Boeing for ten 777-300s. The airline also said it would lease two Airbus A350-900s. Cathay said all the models would be delivered before the end of 2015.

The airline's share price surged following the results announcement, closing 4.5 percent higher at HK$18-94.

4. Lufthansa resumes dividend payments
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The results were the first announced since Christoph Franz took over as chief executive on January 1 from Wolfgang Mayrhuber, who had helped drive consolidation in the global airline industry. Mr Franz was previously deputy chief executive.

Lufthansa’s revenues last year were €27.3bn, up from €22.3bn. Operating profits rose to €876m from €130m. A dividend of €0.60 per share was proposed. In 2009, no dividend was paid.

The company gave no further details ahead of its annual results presentation next week. The headline numbers had been released after a board meeting because they diverged substantially from market expectations, it said.

Last year, Lufthansa was hit by strike action by its pilots, followed soon after by six days of cancelled flights in April because of a volcanic eruption in Iceland. Further disruption followed in December because of the severe winter weather. Lufthansa also saw costs arising as a result of higher oil prices.

But the airline has recently benefited from increasing passenger numbers and freight business – which has been boosted by the strong export-led economic recovery seen in Germany last year.

NEHA JAIN

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