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Fares rise again on higher fuel costs

On top of new baggage fees, major airlines hike prices up to $60 for a round-trip ticket.

May 24, 2008|From the Associated Press

Turns out that new baggage check fee wasn't the end of it.

U.S. airlines ratcheted up the pressure on fliers ahead of the holiday weekend, significantly raising ticket prices to offset the runaway cost of fuel. The three biggest carriers each boosted most domestic fares by as much as $60 round-trip, while budget airline AirTran Airways raised its leisure fares by $30 round-trip.

UAL Corp.'s United Airlines led the round of increases late Thursday, raising round-trip ticket prices by $10 to $60, depending on how far passengers fly and the competition on the route.

Travelers will pay the biggest increase on routes of 750 miles or more -- less than the distance from New York to Chicago.

"It's part of all the work that we're doing to try to offset fuel costs," United spokeswoman Robin Urbanski said.

AMR Corp.'s American Airlines, the biggest U.S. carrier, and No. 3 Delta Air Lines Inc. matched the ticket price increases Friday.

Separately, AirTran raised leisure ticket prices by $30 and business-class fares by $50 round-trip. Such a large change is unusual for a budget carrier.

The increases came just days after American said it would begin charging customers $15 to check a single piece of luggage. Representatives from other carriers, many of which already charge $25 for a second checked bag, said they were considering following suit.

"Everything is under consideration with fuel the way that it is," said AirTran Holdings Inc. spokeswoman Cynthia Tinsley-Douglas.

Airlines have come under intense pressure to boost revenue and cut costs as the cost of fuel has soared. As of Monday, spot prices for jet fuel in New York were up 43% from the start of the year, according to the Energy Information Administration.

United has been among the most aggressive carriers in raising fares and fuel surcharges, and its increases are often rapidly matched by competitors. Airlines are prohibited from agreeing to simultaneously raise fares, but nothing prevents them from following a rival's lead.

In another sign of the pressure facing air carriers, Northwest Airlines Corp.'s cargo division said Friday that it was raising its fuel surcharges on domestic and some international routes.

Midwest Airlines and Frontier Airlines, meanwhile, became the latest carriers to announce charges for second checked bags. Neither charges a fee to check a single bag.

On Wall Street, airline stocks took a beating as oil prices resumed their climb, with benchmark light, sweet crude rising $1.38 to settle at $132.19 a barrel on the New York Mercantile Exchange.

Shares of UAL, Delta, Northwest and US Airways Group Inc. each hit their lowest points since the carriers emerged from bankruptcy protection, while AirTran shares were trading at their lowest point in more than five years. AMR shares hit a multiyear low Wednesday.

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