Delta & Northwest CEOs Say All Airlines Should Raise Fees 15-20%

Delta’s CEO, Richard Anderson, told reporters today that all airlines need to raise fees by as much as 20% “just to break even due to the rising price of fuel.” His new bedmate, Northwest CEO Doug Steenland, piped in to say cost-cutting measures “have largely been exhausted”—and by “cost-cutting” we assume he means, “We can’t find anything else to add surcharges to, except maybe the bathroom and the recycled oxygen, and we’re not monsters.”

Anderson also was asked if a combined Delta-Northwest would be profitable in its first year, and he responded, “It will all be a product of fuel prices … and stay tuned for earnings tomorrow and you’ll see what a dramatic effect it’s had.”

“Report: Delta CEO says airline fares to rise 15-20 %” [BizJournals]
(Photo: Getty)

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  1. bradanomics says:

    I bet they (the CEOs) are still making millions of dollars though.

  2. WayDownRiver says:

    Um, despite the snarky tone of the post, it’s hard to fault airlines for raising prices and/or fees any way they can. Have you followed fuel oil prices? Do you think airlines should become financial basket cases so we can continue in our fantasy of forever-cheap transportation?

    The price to fly has nowhere to go but up along with the price of fuel–and way up. Cheap flying was fun while it lasted, but it’s over.

  3. Nighthawke says:

    “They are not monsters”…. I believe that is a bit late in the game, eh?

  4. I’m surprised we haven’t had more airlines bite the dust the fuel issues others have mentioned..

  5. Angryrider says:

    @bradanomics: And why shouldn’t they? They deserve it.
    Now if someone would make the It.

  6. Okaasan says:

    They really don’t want us to fly, do they? Another 15% – 20% on top of the extra bag fee, the pet fee, the just because fee . . . I’m almost fee’d out. Maybe I’ll drive.

  7. humphrmi says:

    If the cost of flying must go up because of oil, fine… but I would rather see those prices reflected in fares, not hidden costs – it makes the whole thing look like they’re trying to hide something.

  8. StevieD says:

    Of course Delta and Northwest agree….. they are about to become the same darn company

  9. doctor_cos wants you to remain calm says:

    Isn’t there a fee fee?
    Bad enough when you pay bills online, you pay a convenience fee for many of them.

  10. xenth says:

    They should’ve done this awhile ago instead of going the dozens of hidden fee route. Now we’re already pissed off from being nickel and dimed.

  11. ConsumptionJunkie says:

    This is too much! I want to protest all these ridiculous increases.

  12. bloodhound96 says:

    @ConsumptionJunkie:

    what do you want airlines to do? go broke and eat the cost of rising oil prices, leading to government bailouts, adding more debt to this country, more taxes? For every dollar oil goes up, operating costs at the major airlines rises around 1 million. And the airlines have cut every perk of flying. Short of charging for bathroom use..oh crap, don’t tell them I said that.

  13. jpdanzig says:

    Cost-cutting measures “have largely been exhausted” at the airlines? Yeah, how about the salary of the CEOs? How many tens of millions of dollars of lard could be cut right there, and how many jobs saved? Of course, considering what sort of golden parachutes these raptors have undoubtedly arranged for themselves, their standing down would probably bankrupt the airlines immediately.

  14. ironchef says:

    telling a whole industry to raise prices by x% is collusion isn’t it?

    That’s illegal right?

  15. bradanomics says:

    @Angryrider: I hardly think any CEO making millions of dollars deserve to be paid that much money.

  16. warf0x0r says:

    @bradanomics: Only if they have to pay fines if they have a bad quarter

  17. DeltaPurser says:

    @Okaasan: Funny you should say that… $300 for a round trip from NY to LA is still NOTHING compared what you’d spend on gas and lost wages driving.

  18. LEEED says:

    I believe most people wouldn’t mind paying some of the extra dollars IF they were getting a quality product. How many people really enjoy flying anymore, I suspect very few. Not all of the problems are the airlines fault, but they could make the flying experience a little more enjoyable. I am old enough to remember when flying was a real adventure and something we looked forward to. No more.

  19. Islandkiwi says:

    Raise prices all you want, mr. Airline guy. But suggesting that all airlines should raise their prices by X amount sounds suspiciously like price fixing.

    And airlines need to do something. American is simply atrocious to fly these days, with no space in coach and no services. I’d swear Greyhound would be more comfortable.

    Did you know American doesn’t serve a meal in coach when flying from Dallas to Honolulu? That’s a nine hour flight.

  20. Parting says:

    There should be a law, that forces all airline companies give a TOTAL price, with taxes and all extras.

    That way, we would be able to choose easily our fares, and our preferred airlines.

  21. Parting says:

    @bradanomics: Most CEOs do not deserve millions.

    Especially in airline industry. Presently, profit margins are around 2%. (Which is pretty low).

    Those millions could be better invested in other departments, to raise airline’s profitability. I can think right away : customer service, research, marketing, new employees training, etc.

    Anyone, with common sense, knows that you have to raise prices, when costs rise, and you cannot do anything to reduce current expenses. Only, somehow, they are not paid millions for such ”DUH!” statement.

  22. Parting says:

    @Islandkiwi: Lately, the best flying experience, was surprisingly with LOT (polish airline). I never had such good customer service from airline employees before. And food was pretty decent.

    Some companies should learn that good customer service = repeat customers.

  23. vastrightwing says:

    I can think of some new fees to add:
    Crying baby? $20
    Take up more than 1 seat? $100
    In fact, charge passangers by the pound.
    You want your seat to recline? $10/inch
    You want to go to the bathroom? $1.00
    I’m sure I can come up with more fees too.

  24. humphrmi says:

    @vastrightwing:

    You want your seat to recline? $10/inch

    Give me that option and I’ll pay 250 bucks to put that baby all the way back. And the guy behind me can go F himself, I paid dammit.

  25. hamsangwich says:

    @vastrightwing:

    Want friendly service? $20
    Want any service? $10
    Don’t want to be yelled at and hit with a cattle prod? $5

    I would applaud the airline industry if they just had simple fares, list the total cost no extra fees and incorporate whatever fuel costs into that price. The problem is that another airline won’t do that and customers will fall for the “cheaper” price listed and then pay fees. Collusion is bad, but some sort of standard industry pricing agreement where the price is simplified would not be a bad thing. I feel for the airlines, it’s such a horrible business to be in. Tons of fixed costs in capital equipment and then the added burden of fluctuating fuel prices makes profits very difficult to comeby. They should just link ticket prices to oil prices that update each day with the end price for a barrel of oil.

  26. Kaix says:

    @Victo: that level of service is the norm with international airlines (well, many of the established ones anyway sans British Airways and a few others). I don’t know why anyone, when given a choice, would fly a US flag carrier over an international airline (with the exception of earning frequent flyer miles).

  27. Deryn says:

    @Angryrider:

    Here you go. Sadly, it doesn’t go 300 mph or have any pokey ways to secure you.

  28. ffmariners says:

    @bloodhound96:

    Uhhhh… for every CENT oil increases, costs go up 150-300 MILLION for major airlines… (NY Times or USA Today… I was reading both on my flight to Houston last week and forget which had that article)

    @ no one in particular: Ever fly Ryan Air? If you want, airlines can become more profitable by removing ALL amenities from airplanes (like reclining chairs and window screens). They can also start flying to more secondary airports. Or you can keep paying for the comfort and convenience and realize prices raise…

  29. apeguero says:

    A large part of the cost of an airline ticket these days are taxes and all of the new 9/11 related fees. Don’t forget that. You could buy a $29 fare from JFK to DC but end up paying close to $150 because of the taxes and fees.

    Airlines lost me when they started limiting bag weight to 50 lbs from 70 lbs for international. The response I got from a gate attendant was that the airline makes more revenue by using the saved space to carry FedEx and other packages. Smart move by the airline but bad customer service. Now they charge $25.00 fee for a 2nd checked bag? What nonsense.

    It’s what you get when you have a bunch greedy, canieving bastards running airlines with no fear of failing because Uncle Sam will just bail them out if they do. Give me a price for the damned airfare and not an itemized bill.

  30. dragonfire81 says:

    Again, there is that stupid “let’s raise the price” logic.

    Let’s say they have a million paying customers paying $100 each but realize that in order to break even each customer would have to pay $175 so they raise prices.

    Problem is, now you have a certain percentage of those million customers that WON’T be able to afford to fly anymore and you have to find other customers to pick up the slack. Problem is you’ve made it harder to draw them in now that you’ve jacked up prices.

    I sometimes feel like no one ever considers this very simple logic.

  31. exkon says:

    @dragonfire81:

    How does that “simple” logic factor in the rising price of fuel?

  32. smoothtom says:

    The airlines already rely on public subsidy–they don’t own the airports, they don’t build the approach roads that allow people to drive to the airports, they don’t run the air traffic control system that keeps planes from slamming into each other. Imagine if our ticket prices had to cover THOSE costs as well. We’re going to have to determine how much of a public good affordable air travel is and decide what to do when fuel prices make it unaffordable to most people.

  33. flyingphotog says:

    Here’s a formula airlines can’t seem to follow that many other industries adhere to.

    1. Raise fares to cover fuel expenses.
    2. Reduce flights and aircraft to meet demand after less passengers are willing to fly. This will cut operating costs.

    Here’s the formula (most) airlines seem to follow, that got us to where we are today.

    1. Operating costs go up, company loses millions quarter after quarter, pissing off shareholders.
    2. Furlough thousands of employees.
    3. Demand remaining employees take a 30% paycut, pissing off employees.
    4. Executives give themselves bonuses, pissing off employees.
    5. Customer service drops, more bags “lost”, pissing off passengers.
    6. Chapter 11.
    7. CEO bails out with Golden Parachute.
    8. Rinse / Repeat

  34. BigElectricCat says:

    @bradanomics:

    Gerry Grinstein at Delta (this was a few years ago) refused all bonuses and stock options, and took a salary of only $500,000.

    Of course, that was after that bastard Leo Mullen damn near flew Delta into the side of a mountain.

  35. BigElectricCat says:

    @humphrmi:

    That’s quite a coincidence, given that First Class fares are often coded “F” by the airlines.

    Pay an F fare, and you get the extra recline for free, and you don’t have to tell anyone to F themselves.

    Of course, the airlines could just remove all the seats and install hangstraps and grab bars. Then seat recline wouldn’t be a problem since everyone would have to stand.

  36. flyingphotog says:

    @dragonfire81:

    Let’s say it takes 10,000 flights to fly those million customers (100 pax per flight). After fares go up to $175, maybe 850,000 passengers are still going to fly. So now you only need to fly 8,500 flights instead of 10,000. This would be substantial savings to the airline by not operating those 1,500 extra flights.

  37. Chairman-Meow says:

    Again, the Dinosaurs speak.

    I would gladly pay more for my ticket IF they would just give me a complete price on the ticket INCLUDING all the fees BEFORE I buy. Also, treating me like a human being instead of a cow at the slaughterhouse would be beneficial too.

  38. buckfutt says:

    Whoops, Southwest is on target to make half a BILLION in profit this year, and they sure aren’t talking about raising their prices.

    Try again, boys.

  39. unklegwar says:

    I hate the airlines as much as the next guy, but, reality has to set in sometime. You can’t have fuel costs rising and expect to NOT see significant price hikes. You pay it at the pump for your car, why should planes be any different?

  40. synergy says:

    How about lowering CEO salaries 15-20%?

  41. picardia says:

    ITA that price hikes due to oil costs are inevitable. But it would be nice to see (a) cutbacks in the executive suites, (b) some basic accountability for customers and (c) more straightforward pricing.

    I’m very glad I bought the tickets for my fall vacation last week.

  42. mk says:

    The fact of the matter is, airline fees are going to increase because fuel is going up. However, there is a way to mitigate this cost to you – stop flying. I know some people have to fly for work. But you don’t HAVE to take a European vacation. You don’t HAVE to fly to the Bahamas in February. If we didn’t expect the cost of a plane ticket to be the same as taking a bus and if we didn’t think it was our right to travel half way around the world to entertain ourselves, then maybe we’d accomplish a better airline industry and a cleaner earth. Sure, there are lots of other issues with the airlines, but consumers are part of the problem. We demand cheap flight. We demand to get across the country at the time we want . We demand that flights are flown if they’re not full. Apparently the airline industry can no longer sustain this, and now we have to pay for it – with more than money.

  43. flyingphotog says:

    We can bitch and moan all we want here, but to make an impact you have to vote with your wallet.

  44. Buckus says:

    Prices rise. It is inevitable. I would appreciate more straightforward pricing, though, none of this “$99 fare” and then tack on $100 in “fees.” Maybe there should be a law that requires airlines to quote their tickets inclusive of ALL fees. Otherwise, we can’t expect them to lose money forever, because if they do there will be only a few airlines in a few years. Then you’ll REALLY see what high prices are.