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Airlines Increase Ticket Prices As Summer Travel Season Looms

Posted on: Tuesday, 9 May 2006, 06:02 CDT

By Trebor Banstetter, Fort Worth Star-Telegram, Texas

May 9--Airlines are once again jacking up fares as the summer travel season approaches, hoping to cash in on heavy demand and soften the impact of expensive fuel.

American Airlines, based in Fort Worth, raised leisure fares by $5 each way over the weekend. That followed a move last week by Houston-based Continental Airlines, which raised fares by $2 each way.

On Monday, it appeared that all of the major hub carriers had matched American's increase.

And even low-fare leader Southwest Airlines, based in Dallas, is likely to boost its prices in coming months, said airline analyst Jamie Baker of JP Morgan Securities.

"This represents the year's fifth broad-based leisure-fare increase," Baker said in a report to investors Monday.

The price increases haven't quelled consumers' demand for air travel, he said. There is "no evidence of passenger resistance to higher fares," he said. That's because even with the price increases, airline tickets remain a good value compared with historical prices. And high gas prices have made driving a less-attractive alternative for summer vacationers.

Mark Streeter, a bond analyst with JP Morgan, said the industry's revenues could grow as much as 10 percent this year thanks to higher fares.

"The continued fare momentum makes us increasingly comfortable with our" forecast, he said.

Shares of AMR Corp., American's parent (ticker: AMR), dropped 31 cents in trading Monday to $28.20. Southwest shares (ticker: LUV), fell 27 cents to $16.34.

Beth Harbin, a spokeswoman for Southwest, wouldn't comment on whether the airline plans to raise prices. But she said: "It's no secret that fuel has been such an overwhelming burden to many of the airlines. That's why you're seeing many of the fare moves that we are right now."

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Trebor Banstetter, (817) 390-7064 tbanstetter@star-telegram.com

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Copyright (c) 2006, Fort Worth Star-Telegram, Texas

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NYSE:AMR, NYSE:CAL, NYSE:LUV,

Source: Fort Worth Star-Telegram (Fort Worth, Texas)

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