In the airline business, two things are certain: There is only so much space on the tarmac and only so much space in the skies. To keep things balanced between heaven and earth, therefore, some planes must go up and others must come down.
Take last week, for example. Southwest
It proceeded like this. Two weeks ago, Continental Airlines hiked its airfares on most flights by $10, arguing that this was necessary to help offset the high cost of jet fuel (a perennial complaint). Most of the old-guard airlines nodded in agreement, and upped their own airfares as well. Northwest, however, kept its fares in a holding pattern, hiking prices only selectively on certain discounted flights. Southwest more or less ignored this entire hubbub, saying it would "consider" raising rates, while fellow discounter JetBlue
Those three "sort of" dissenters were all it took to reveal Continental and its old-guard brethren as flying paper tigers. Over the next few days, their price hikes collapsed, one by one. Until last week, when the remaining holdouts, Continental and American, folded simultaneously, rolling back their prices a la Wal-Mart
And Southwest? Southwest pondered and considered, then without much more than a downward glance at rapidly descending competition, raised its prices by a buck on some routes, two bucks on others. And before you could say "lickspittle," all the big airlines followed suit and matched the little airline that could (make a profit) dollar for dollar.
To this Fool, it looks like the airline industry has a new flight leader.
One of the other price-hike dissenters, JetBlue, is a Motley Fool Stock Advisor recommendation. You can sign up for six months, without risk, to learn more.
Fool contributor Rich Smith owns no shares in any company mentioned in this article.
