Domestic Air Fares Heading Up $10

(AP)  Several major carriers, led by American Airlines and Delta Air Lines Inc., are raising many U.S. fares by $10 per round trip, including business fares and advance-purchase tickets bought by leisure travelers.

A leading Wall Street analyst expects the fare increases will stick, unlike a failed effort to raise prices last week.

American, the nation's largest carrier, raised fares Thursday night on most of its routes except to and from Dallas, where it is locked in a fare war with Southwest Airlines Co. Delta raised fares broadly except where it competes with Southwest and other low-cost airlines.

Continental Airlines Inc. and US Airways Group Inc. both said Friday that they would match the higher fares. United Airlines was still considering the issue, but it raised other fares by up to $50 one-way.

The leading low-cost carriers, Southwest and JetBlue Airways Corp., said Friday they had not raised prices.

At the same time, American cut fares to and from the Dallas area to compete with a fare sale announced Wednesday by Southwest.

If Thursday night's increase sticks, it would be the 22nd broad fare increase by U.S. airlines in the past two years, said Jamie Baker, an analyst with J.P. Morgan.

Low-cost carriers have balked at some fare increases, occasionally causing the older traditional airlines such as American and Delta to rescind increases. But this time, most of the increases are on routes not flown by the discount carriers, meaning they can't play spoiler, Baker said.

As a result, Baker gave the latest fare boost "a high probability of success."

Airlines have cited rising fuel costs for most of their previous fare hikes, but fuel prices have eased in recent weeks. Still, a spokesman for American Airlines said fare increases never caught up to rising fuel costs.

"We're still trying to get to the point where revenue covers our expenses," said the spokesman, Tim Wagner. "Fuel is still really high."

Delta officials didn't immediately return calls for comment.

UAL Corp.'s United Airlines was still considering a broad increase, but separately it raised last-minute fares on about 50 routes by $25 to $50 each way, said spokeswoman Robin Urbanski. The airline competes with Southwest on many of those routes, she said.

Last week, United had to back off an announced fare increase after some carriers balked.

American on Thursday cut fares as low as $39 one-way to and from the Dallas area in response to a fare sale announced Wednesday by Southwest.

American's lowest prices apply to flights between Dallas and nearby cities such as Austin. The lowest one-way fares, based on advance purchase of round-trip tickets, rise to $79 or $89 to more distant cities such as Philadelphia and Las Vegas.

American and its American Eagle regional airline fly out of Dallas-Fort Worth International Airport and Dallas Love Field.

A new federal law relaxed restrictions at Love Field, allowing Southwest to sell tickets for one-stop travel between Dallas and far-flung U.S. cities. Since then, Dallas-based Southwest and American Airlines, a unit of Fort Worth-based AMR Corp., have waged a fare war for North Texas travelers.

Both airlines limit the number of seats sold at the cheapest prices.

By David Koenig

[flolake]

Airfares must at the very minimum attain a high enough level to pay for the mercurial jet fuel.
Airline employees nationwide have given until there is hardly anything else to give. Now it is the flying public's turn to make up the difference even if it means still less planes in service. 95% should be the minimum load factor and any load factor less than 10% of breaking even should be a cancellation consideration.

In short, U.S. airlines need their profitability back yesterday. The ability to substitute smaller aircraft on short notice needs to be implemented as quickly as possible.