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Southwest prompts other carriers to boost their fares

The airline, in its fourth increase this year, hiked its one-way ticket prices over the weekend.

September 05, 2007|From the Associated Press

DALLAS — U.S. air carriers increased fares Tuesday after Southwest Airlines boosted its one-way ticket prices by as much as $10 over the weekend, citing higher fuel costs.

Southwest hiked fares by $1, $3 and $5 in some short- and medium-haul markets. The $10 one-way increase is in markets of more than 1,250 miles, including Albuquerque to Baltimore, the company said.

"It is a small increase to mitigate cost," said Whitney Eichinger, a spokeswoman for Dallas-based Southwest.

It was the low-cost carrier's fourth fare increase this year, and other airlines quickly followed suit.

"This is a very competitive business, and we always pay close attention to what our competitors are doing," said Tim Smith, a spokesman for Fort Worth-based American Airlines, the nation's largest carrier. American is a unit of AMR Corp.

United Airlines, a unit of Chicago-based UAL Corp., matched the increase in markets where it goes head-to-head with Southwest.

"We have matched the increase that Southwest initiated to ensure that our fares stay competitive and to help offset the rising cost of fuel," United spokeswoman Roban Urbanski said.

US Airways Group Inc., Northwest Airlines Corp. and Delta Air Lines Inc. also matched the fare increase.

It's been a busy summer travel season for the major airlines, with some carriers posting record occupancy on their planes.

Rising fuel costs are among the problems the industry still faces as it emerges from several years of difficult losses. Southwest, the only major U.S. carrier to remain profitable through the recession and terrorist attacks of 2001, has said that fuel-hedging contracts will save it money.

"The demand, I think, still warrants higher ticket prices," Calyon Securities airline analyst Ray Neidl said. "Southwest is facing cost pressures in the nonfuel area, and it's been able to counterbalance with hedges and in other areas, but they're running out of other places to cut."

Southwest shares rose 19 cents to $15.30 on Tuesday. AMR stock increased 48 cents, or almost 2%, to $24.99. UAL shares rose 38 cents to $47.85. US Airways shares rose $1.61, or 5.2%, to $32.56. Delta shares rose 65 cents, or 3.9%, to $17.53. Northwest Airlines shares increased 49 cents, or 2.6%, to $19.07.

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