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Airlines scale back latest fare increase

Most major U.S. airlines sharply scaled back their latest price increase on routes where they compete with low-fare giant Southwest, which declined to go along with the higher fares.
/ Source: The Associated Press

The airlines' latest attempt to raise fares on U.S. travelers fell apart this week, but industry observers expect the companies to keep trying to boost prices because of high jet fuel costs.

United and Continental added $10 to most round-trip fares in the U.S. last week. Delta, American and several other airlines followed suit, but low-fare giant Southwest balked, forcing the rest to roll back prices where they compete with Southwest.

On Tuesday the $10 increase collapsed. On top of that, discount airlines AirTran and Frontier put a limited number of seats for summer travel on sale at even lower prices.

Until recently airlines had successfully raised base fares several times since December to offset higher jet fuel prices. The last three attempts to raise fares have failed, however.

Oil prices hit a 30-month high on Wednesday, topping $109 a barrel.

Rick Seaney, CEO of, said with oil prices hovering near $110 a barrel, we'll continue to see the major airlines try to boost domestic fares. But they'll need support from the discount airlines to succeed, he said.

Jamie Baker, an analyst for JPMorgan Chase, said he wouldn't be surprised if the major airlines try to raise prices by $2 to $6 per round trip in the next week or so on routes where they compete with low-fare carriers, and by larger amounts in markets not served by someone like Southwest, AirTran or Frontier.