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Airlines Hike Fares As Fuel Costs Surge

Posted on: Thursday, 8 September 2005, 09:00 CDT

Airlines raised fares as Hurricane Katrina drove jet fuel prices higher and shortened the time Northwest Airlines Corp. said it has to avoid bankruptcy.

UAL Corp.'s United Airlines, the second-largest carrier, raised round-trip fares $10 to $30, depending on the length of the trip, said spokesman David Dimmer. The increase includes leisure, business and international fares.

Delta Air Lines, the third-largest U.S. carrier, matched United in several markets, and Delta and Continental Airlines put in separate round-trip increases of $10 on routes with low- cost carriers, company spokeswomen said. Continental is the fifth- largest U.S. carrier.

"Fuel is going up; it's about time somebody made a move," said Terry Trippler, who monitors fares for the online travel Web site CheapSeats.com. "They've got to raise" fares. Airlines have increased fares several times this year, he said.

Jet fuel rose to $2.40 a gallon in New York harbor Thursday, up 25 percent since Aug. 26, the last day of trading before Katrina hit Louisiana, Mississippi and Alabama four days ago. The price fell to $2.29 a gallon on Friday.

"So far the fare increases haven't come close to offsetting oil," said Clark Orsky, a fixed-income analyst with KDP Investment Advisors in Montpelier, Vt.

Northwest, the No. 4 U.S. carrier, said in a filing last week that fuel prices have shortened the amount of time it has to reduce costs and avoid bankruptcy.

Delta has also warned it may seek bankruptcy, and United and US Airways Group are operating in Chapter 11. US Airways increased fares $10 to $30 round-trip, depending on the length of the flight, company spokeswoman Amy Kudwa said.

Northwest increased round-trip fares in many markets by $10, while US Airways raised them by $30 in some markets, Trippler said.

America West Holdings Corp. increased a few fares $10 round trip, and AMR Corp.'s American Airlines, the largest U.S. carrier, had yet to make a move, Trippler said.

Southwest Airlines Co., the sixth-largest carrier, hasn't matched rivals. "It's something we're certainly looking at," said Linda Rutherford, a company spokeswoman. "The increase in jet-fuel prices has us concerned."

Airline fuel costs this year will rise nearly a third, to $28.1 billion.

Source: Buffalo News

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