Major airlines raise most U.S. fares by $5
The new prices do not include Hawaii flights
Five of the largest U.S. carriers raised fares $5 each way yesterday on most domestic flights to take advantage of strong travel demand.
The increase, adopted by UAL Corp.'s United Airlines, AMR Corp.'s American Airlines, Delta Air Lines Inc., Continental Airlines Inc. and US Airways Group Inc., applies to business and leisure fares in the 48 contiguous U.S. states, airline spokesmen said yesterday. Northwest Airlines Corp. also was studying the move, a spokesman said yesterday.
The new fares are the first broad-based boost since U.K. officials disrupted a terrorist plot against airlines on Aug. 10, Jamie Baker, a J.P. Morgan Securities analyst, said in a report. The threat prompted tighter security rules, damping travel demand. Carriers also are paying 10 percent more for jet fuel than a year ago.
"It could portend other fare increases," James Corridore, a Standard & Poor's analyst in New York, said in an interview. "The last time they started, they didn't do just one here or there. Once they saw they would hold, they became more aggressive."
Continued high travel demand and tighter capacity would enable airlines to keep boosting prices, Corridore said.
Baker said that before yesterday, U.S. carriers had taken 21 broad-based fare increases in the past two years.
This one has a "high probability of success," Baker said, because it covers most fares and because some of the airlines omitted markets where they compete directly against low-cost carriers such as Southwest Airlines Co.