Airlines raise fares, citing costlier fuel

Most of the country's largest airlines, including Fort Worth-based American Airlines Inc., on Friday matched an air fare increase initiated Thursday by Northwest Airlines Inc.

The price increase ranges from $10 to $20 on round-trip leisure travel and from $20 to $40 round-trip on business fares.

While United Airlines Inc. and Delta Air Lines Inc. also imposed the increases, low-fare carrier Southwest Airlines abstained. The Dallas-based airline normally does not follow the rest of the industry's pricing moves.

The fare increase comes after two failed attempts to raise ticket prices during the last four weeks.

Just a week ago, Houston-based Continental Airlines Inc. tried to raise ticket prices by up to $40 round-trip on leisure fares.

That effort fell apart early this week after Northwest failed to match the increase.

Nonetheless, Continental joined the bandwagon Friday.

In the highly competitive airline industry, price increases do not stick unless all of the major carriers agree to raise their fares at the same time.

Airlines are eager to raise ticket prices to mitigate the effect of higher jet fuel prices, the industry's second largest expense after labor.

Jet fuel costs for the industry are estimated to climb to $14.6 billion this year, up 43 percent from $10.2 billion in 1999.

"This [air fare increase] is a substantial increase," said Raymond Neidl, an airline analyst at ING Barings in New York.

"It's going to be quite beneficial to the industry."

Airlines can afford to charge more because demand for air travel remains strong and the supply of available seats on domestic flights is not unusually high, he said.

The fare increase won't begin to affect carriers' balance sheets until the second quarter, he added.

The price increase comes on top of a $20 fuel surcharge on round-trip flights that most airlines adopted in late January. Since then, oil prices, and with it the cost of jet fuel, have continued climbing.

"This fare hike is the type of increase we expected because of fuel," said Terry Trippler, editor of 1travel.com, a Web site that tracks airfares. "We are going to have more increases."

Mr. Trippler advises consumers to check air fares even after they have purchased a ticket. If the fare drops, most airlines will refund the difference in the form of a voucher that can be used for future travel, he said.