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3 Biggest U.S. Airlines Rescind $10 Fare Hike

August 22, 2006|From Bloomberg News

American Airlines, United Airlines and Delta Air Lines Inc., the three largest U.S. carriers, rescinded a $10 increase on round-trip tickets because rivals didn't match the higher prices.

UAL Corp.'s United, which initiated the increase Aug. 17 for tickets usually purchased by business travelers, canceled it Monday "so we can stay competitive," said Robin Urbanski, a spokeswoman for the Elk Grove, Ill.-based carrier. "The response wasn't there."

U.S. airlines have succeeded with 21 broad fare increases since 2005 and failed 17 times, said Jamie Baker, a JPMorgan Securities analyst. They have tried to raise prices this year to help cover higher jet fuel costs. The latest attempt was for first-class seats and tickets bought within seven days of a flight's departure in all U.S. markets.

"We could see this come right back," with another attempt in days or weeks, Minneapolis-based fare analyst Terry Trippler said.

That airlines tried the increase is a positive sign, given that travel drops off in September, the terrorism threat level was raised Aug. 10 and some carriers are increasing capacity, Trippler said.

AMR Corp.'s American, the world's largest airline, matched United's increase Friday and rescinded it Saturday because "we can't afford to be out of line with others," said Tim Wagner, a spokesman for the Fort Worth-based company.

Delta matched United on Sunday and dropped the increase Monday, said Betsy Talton, a spokeswoman for the Atlanta-based carrier. Delta has been in bankruptcy protection since September.

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