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American, Northwest, JetBlue raise fares

Leading U.S. air carrier American Airlines and three rivals Friday said they had raised ticket prices in various markets, seeking to recoup some of their increased costs from record fuel prices.
/ Source: Reuters

Higher air fares looked more likely Friday as American Airlines, Northwest Airlines and JetBlue Airways went along with competitors’ increases that the companies said were necessary to offset rising fuel prices.

Airline stocks skidded after a three-week surge pushed the price of crude oil near a record of $67 a barrel during the day, taking jet fuel prices along with it.

Airlines have already raised prices several times this year. The latest round of increases began Wednesday night with United Airlines, a unit of UAL Corp., Delta Air Lines Inc. and Continental Airlines Inc. They were followed Thursday by US Airways Group Inc.

By Friday morning, American Airlines, the largest U.S. carrier, had raised most domestic fares by $10 per round trip and some by $20 a round trip to match Delta, a spokesman said. Not all the companies raised their prices to the same level earlier in the week.

Northwest Airlines Corp. matched Delta’s $20 round-trip increase on mid-level leisure fares and expanded it to walk-up fares that had been capped at $599 each way, said Northwest spokesman Kurt Ebenhoch. Northwest also matched Delta’s smaller increases on routes where it competes with low-cost carriers.

Asked why Northwest was raising fares, Ebenhoch answered: “Fuel.”

JetBlue Airways Corp. raised Florida fares and one leisure fare on longer flights by $10 per round trip, a spokeswoman said. AirTran Airways raised all fares $10 per round trip, a spokesman said.

Some low-cost carriers, notably Southwest Airlines Co., had not matched the increases, but their resistance would not be enough to stop the price hikes from sticking, said Terry Trippler, who tracks air fares for online travel site cheapseats.com.

“It looks like this is a go,” Trippler said. “Before August is over, there is going to be another increase. People understand why the airlines are doing this because they drive by the gas station every day.”

Still, the increases were not even. United generally raised fares $10 per round trip, less than Delta, and some of the low-cost carriers were holding out. That could cause fluctuations over the weekend, with fares on some routes still moving up or down.

“We continue to study and watch the marketplace and decide where we’ll do the matching,” said Tim Smith, a spokesman for American Airlines.

The price of jet fuel has jumped about 60 percent from a year ago to more than $1.70 a gallon in New York and the Gulf Coast and $2.00 a gallon in Los Angeles, according to government statistics.

It is squeezing the bottom line of airlines. American’s parent, AMR Corp., saw its fuel prices rise 47 percent in the second quarter to $1.35 billion, almost wiping out a narrow profit.

Southwest is better insulated than other carriers because it took options to buy most of its fuel at far lower prices. Other airlines didn’t have the cash to make such hedging maneuvers.