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Southwest Airlines raises fares

/ Source: The Associated Press

Southwest Airlines has raised fares on more than half its seats by up to $10 each way, and several competitors matched the increase.

Dallas-based Southwest on Friday raised one-way fares by $10 on flights of more than 1,000 miles and up to $3 on shorter flights. It was Southwest’s second broad increase in three months.

“It’s still about fuel,” said spokeswoman Paula Berg. “(Oil) prices remain high, and we expect them to stay high. We have to offset our fuel bill.”

Berg said the $10 increase affected one-fourth of its customers and the smaller increases would hit another one-third.

On Saturday, AMR Corp.’s American Airlines, UAL Corp.’s United Airlines, Northwest Airlines Corp., Continental Airlines Inc. and others had matched the increases, according to the carriers, analysts, and experts who track fares.

Southwest built its business by promising low fares, but it has raised prices several times in the past year.

“It is increasingly evident that if we count on higher oil prices, we can count on Southwest to push fares higher,” Jamie Baker, an analyst with JP Morgan, said in a note to clients.

“Southwest’s full court press for higher revenue is a phenomenon we expect to continue for several years given its confluence of rising labor and fuel costs.”

Fare increases can fail if some carriers refuse to go along with the higher prices, but the Southwest increase appeared to be sticking late Monday.

“Given Southwest’s general resistance to fare increases, when it does initiate an increase, the other carriers are happy to join in,” said Neil Bainton of tracking service.

Separately, Bear Stearns raised its rating on Southwest to “outperform.” Also, oil prices fell more than $2, to under $58 per barrel on Monday, which boosted airline stocks.

Southwest shares rose 63 cents, or 4,1 percent, to $15.77 in trading on the New York Stock Exchange.