Southwest Airlines Boosts Fares
Southwest Airlines Co. has raised fares by $3 or $10 for one-way trips — one of its largest increases ever — and boosted the limit on its refundable fare to $319.
The weekend fare hike was the fourth broad fare hike by the nation's leading low-cost carrier this year and the ninth in the past two years.
The company said it raised one-way fares by $10 on flights longer than 1,000 miles and $3 on flights of 751 miles to 1,000 miles. Shorter flights were not affected, said spokeswoman Paula Berg.
Berg said the increase, which took affect Friday night before the July 4 holiday weekend, was prompted by high fuel prices.
"We earned $548 million last year and our fuel bill is expected to be $800 million higher this year," she said. "Something has got to be done about it."
Jamie Baker, an analyst with J.P. Morgan, estimated the fare increases affected 65 percent of Southwest's revenue.
"Southwest's full-court press for higher fares is a phenomenon we expect to continue for many years" unless there is a "precipitous decline" in fuel prices, Baker said. He said the higher fares would offer "significant" help to the airline industry.
Baker and Berg said the increase was matched by several other carriers, including AMR Corp.'s American Airlines, UAL Corp.'s United Airlines, Delta Air Lines Inc., Northwest Airlines Corp., Continental Airlines Inc., AirTran Holdings Inc.'s AirTran Airways, and Frontier Airlines Inc.
By boosting some fares $10 each way, Southwest in part matched its highest fare increase ever, a $10 boost in March.
Despite the fare increases, Dallas-based Southwest is packing in customers.
On Wednesday, the company reported its planes averaged 80.4 percent full in June, up from 76.2 percent a year earlier.
Southwest reported that June traffic jumped 13.2 percent from June 2005, to 6.15 billion miles flown by paying customers.
Capacity, calculated by multiplying the number of available seats times miles flown, rose 7.3 percent. Southwest has been adding capacity while many other U.S. carriers are shrinking because of financial difficulty.