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U.S. Airlines Raise Fares — Again

Posted on: Friday, 12 August 2005, 15:00 CDT

Delta Air Lines Inc., struggling to avoid bankruptcy, and other major carriers increased U.S. fares again Thursday as jet-fuel prices climbed to record levels.

Delta raised fares $10 each way in most markets, and between $3 and $5 on routes where it competes with low-fare carriers, spokeswoman Benet Wilson said. Continental Airlines Inc. said it matched Atlanta-based Delta's changes. UAL Corp.'s United Airlines boosted ticket prices $2 to $5 each way on most routes, spokeswoman Robin Urbanski said.

The airlines are trying to increase revenue as jet-fuel spot prices in New York rose to almost $1.95 a gallon and have climbed 57 percent this year. Crude oil, from which jet fuel is made, reached a record $66 a barrel in New York on Thursday. Fuel costs have extended losses that totaled $33 billion in the past four years for the biggest U.S. airlines.

"It remains to be seen whether Delta's larger dollar increase will prevail," even as fares probably will rise by some amount, said JP Morgan Securities analyst Jamie Baker in a report Thursday. A successful increase would be the industry's 11th this year, with $5 each way the typical amount, he said.

Fort Worth, Texas-based American Airlines, the world's largest carrier, is studying the increases, said Tim Smith, a spokesman for the AMR Corp. unit. United, based in Chicago, is the second- biggest. Delta is No. 3 in the U.S. and Houston-based Continental is the nation's fifth-largest.

Northwest Airlines Corp., based in St. Paul, Minn., and fourth- biggest in the U.S., didn't respond to calls seeking a comment. Arlington, Va.-based US Airways Group Inc., the seventh-largest, raised fares $10 each way in some markets, said spokeswoman Amy Kudwa, who didn't give details.

Fuel is airlines' second-largest cost, after labor, and typically accounts for between 10 percent and 20 percent of expenses, the Air Transport Association trade group said on its Web site. U.S. airlines will pay more than $28 billion in fuel costs this year, rising $6.7 billion from 2004, the group told a Senate panel in testimony July 13.

Source: Deseret News (Salt Lake City)

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