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Airlines raising fares again

The last of the major network airlines matched a $10 increase in the price of many round-trip tickets, making it likely that the fare boost will stick.
/ Source: The Associated Press

The last of the major network airlines matched a $10 increase in the price of many round-trip tickets, making it likely that the fare boost will stick.

By Friday, United and US Airways had matched the increase that was already in place at Delta, Continental and American, said Rick Seaney, CEO of FareCompare.com, a travel Web site that tracks ticket prices.

Seaney said it was the fifth increase in U.S. ticket prices this year. Airlines sometimes roll back fare increases after a day or two, but Seaney said that was unlikely to happen this time because the major players matched the hike so quickly.

Network carriers concentrate operations at a few hub airports, with flights going out from the hub like spokes on a wheel. Low-cost carriers such as Southwest instead fly directly from one city to another, bypassing crowded hub airports.

Southwest and another low-cost airline, AirTran, had three-day fare sales that expired Thursday night and did not immediately match the $10 increase.

The price hike was the second in as many weeks. Still, with a recession and weak travel demand, airlines haven't been able to raise prices as often as they would like, and most lost money in the third quarter that ended Sept. 30.

Thomas Horton, the chief financial officer of American Airlines parent AMR Corp., said earlier this week that airlines have found some pricing power but need to boost fares more to earn a profit.

"We are not there yet, but we have had some traction and I would hope that the industry can get to a healthier place," he said.

Last year, there were 15 broad domestic fare hikes and 17 in 2007, according to FareCompare. The airlines said many of those increases were tied to jet fuel prices, which soared to record highs in July 2008 before plunging, then starting a new ascent in March.