Major U.S. Airlines Boost Fares

Major U.S. airlines kicked off the summer with a round of fare increases, citing the latest surge in fuel costs for the need to charge as much as 3% more per trip.

If it sticks, the move means customers of the largest carriers could pay an additional $20 or more for domestic and international flights as the busiest travel season of the year gears up.

The increases began Tuesday night, when AMR Corp.’s American Airlines and UAL Corp.’s United Airlines, the industry’s two largest carriers, posted higher fares effective immediately. They continued Wednesday, when several others matched them or made similar price boosts.

United said its fare increase averaged 3% on most domestic and international flights, with sale fares and some specialty fares unaffected.

“All the carriers are squeezed in a vise between lower yields and higher fuel costs,” United Chief Executive Glenn Tilton told a House transportation subcommittee Wednesday while testifying about airline pensions. “Fuel is approaching $60 a barrel. Not surprisingly, predictions that the U.S. airline industry would return to profitability have not come true.”

John Tague, executive vice president for marketing, sales and revenue at Elk Grove Village, Ill.-based United, said the airline was confident that its customers would understand the need for higher fares.

American increased most U.S. fares by $5 one way and $10 round trip at about the same time, although it did not raise the highest walk-up fares as United did, American spokesman Tim Wagner said. American’s average one-way fare is about $150, so the increase also works out to about 3%, Wagner said.

“A dollar increase in the cost of a barrel of oil costs us $80 million a year,” he said. “This is a way to try to recover some of that added expense. We still have historically low airfares.”

Following the industry leaders, Delta Air Lines Inc. raised its fares $5 one way and $10 round trip on all flights, US Airways Group Inc. increased some first-class fares in the Caribbean, and Alaska Air Group Inc. boosted prices $3 to $5 each way. Northwest Airlines Corp. said it was studying the fare increases.

Southwest Airlines Inc. did not match the higher prices. Spokeswoman Brandy King said the discount carrier had no plans to implement a fare increase.

The nation’s airlines have been losing billions of dollars as high oil prices make fuel expensive and competition from discounters keeps fares low. U.S. airlines spent an estimated 40% more on jet fuel last year than in 2003, or $6 billion overall, and prices have worsened since then.