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Airlines raise fares by up to $10 each way

Posted on: Monday, 7 August 2006, 14:44 CDT

NEW YORK (Reuters) - U.S. airlines raised fares by up to $10 one-way for tickets geared at business travelers, taking advantage of robust demand at the tail end of the peak summer travel season.

United Airlines, owned by UAL Corp., on Monday said it initiated a domestic fare increase, raising by $5 each way prices on tickets for flights of less than 1,000 miles and $10 for flights of more than 1,000 miles.

However, the carrier rescinded the fare increase, which was put through on Friday, in markets served by low-cost carriers, spokeswoman Robin Urbanski said.

Continental Airlines Inc., US Airways Group Inc., Delta Air Lines Inc., and Northwest Airlines Corp. all matched the increase, which is for fares purchased seven days or less in advance, representatives of the airlines said.

U.S. airlines, helped by a cut in domestic capacity and fuller planes, have been raising fares to offset the effect of high fuel prices and boost profits. The most recent round of price increases was about two weeks ago.

"Lacking any evidence of consumer resistance, our demand bullishness only continues to strengthen," said JP Morgan analyst Jamie Baker in a note.

But airlines have also shown a readiness to cut prices on certain routes in response to competition or to spur demand. US Airways and Delta last week lowered some fares on their New York to Boston routes by as much as 54 percent. Discount carrier JetBlue Airways Corp. cut prices 18 to 34 percent for some seats on flights this autumn, when travel demand generally slackens.

(Reporting by Chris Reiter and Kyle Peterson; Additional reporting by Paritosh Bansal)

Source: REUTERS

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