United Airlines Price Increase for LAX

Airline Quarterly Report United Airlines has instituted a $10 per ticket price increase for passengers flying in to or out of LAX. Sure, you can grumble about how the damn airlines keep raising prices, but at first this one seemed justified to me. That doesn’t make it suck any less to pay more, but the increase is a result of the airport charging the airlines increased fees. Stuff rolls downhill, as they say. But then I read this. LAX shares its side of the story with the following press release:

United Airlines’ $10 increase in ticket prices for Los Angeles passengers wildly exceeds the airline’s full and fair share of the costs to maintain and operate its terminal facilities at LAX. United appears to be exploiting a justified increase in its maintenance and operations costs in order to dramatically increase profits on Los Angeles passengers.

In 2006, United reported more than 4,885,353 enplaned passengers at LAX. Assuming the same level of traffic this year, the airline’s $10 increase per passenger will generate more than $48 million in additional revenue. Yet, United claims the increase in ticket prices is necessary to pay higher maintenance and operations costs totaling $10 million.

Under the terms of their existing leases, United and other carriers are responsible for the full costs of maintaining and operating LAX facilities and LAWA has the right to pass along increases in its costs of operating the terminals, which it does for the benefit of the airlines. LAWA has discussed with the airlines their responsibility to pay fair and reasonable costs to maintain and operate their respective terminals and other facilities at LAX, particularly in the years following the 2001 terrorist attacks. Since then, LAWA has largely shouldered the increased security-related costs itself.

The subsidization of these costs on behalf of the air carriers has become onerous and unfair and LAWA is seeking to recover those costs associated with the terminals. For its part, however, United appears intent on exploiting the matter in order to boost profits, at the expense of its Los Angeles customers.

Hmmm. United is screwing over its customers again. Just like when they decreased miles expirations. It is interesting to me with the wave of budget carriers who ARE making a profit, while the major carriers are going bankrupt, that an airline would increase its prices when that increase may result in passengers using more cost effective competitors.