Who's Next? American Airlines Raises Fares

American Airlines jets on tarmac, John F. Kennedy International Airport, New York, 2007/8/29 AP

Blaming high fuel costs, American Airlines raised many fares in the U.S. by $5 each way but left prices unchanged on routes where it competes with low-cost carriers.

The Thursday night increase affected both advance-purchase tickets favored by vacationers and more costly last-minute tickets aimed at business travelers.

Tim Smith, a spokesman for the airline owned by AMR Corp., said the fare increase was needed to cover high fuel costs.

Shares of AMR rose 59 cents, or 2.5 percent, to $24.50 in afternoon trading.

Fall is typically a slower time for air travel, which could make carriers reluctant to raise fares.

But this week, UAL Corp.'s United Airlines raised fares to Hawaii and other carriers went along, indicating that demand is firming, said Rick Seaney, chief executive of travel Web site FareCompare.com.

Jamie Baker, an analyst for JPMorgan, said the recent run-up in spot prices for jet fuel made it highly likely that other network carriers would match American's fare hike.

Other carriers were studying American's increase before deciding whether to match it.

Betsy Talton, a spokeswoman for Delta Air Lines Inc., said the carrier had not made any fare increases Friday. United and Continental Airlines Inc. had not raised fares by midday but declined to rule out an increase. Northwest Airlines Corp. did not immediately return calls.

If the higher prices stick, it would mark the seventh such increase this year, Baker said.

Baker said American and Northwest were most likely to further reduce flights because of their large numbers of fuel-inefficient narrow-body jets. Last week, US Airways Group Inc. said it expected to cut capacity 4 percent in the fourth quarter compared with the same period last year.
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