Airlines hike fares for 1st time since summer

[October 20, 2011]  NEW YORK (AP) -- Holiday travelers may want to lock in airfares now, because they're going up.

Major airlines are joining in the first widespread airfare increase since early August. The hike was initiated by Delta Air Lines Inc. late Tuesday when it raised fares by $4 to $10 on roundtrip flights across most of its U.S. routes, according to Rick Seaney of Farecompare.com. Soon after, United Continental Holdings Inc. matched the increases.

By early Wednesday, every other major airline had raised fares, including Southwest, according to JPMorgan's Jamie Baker. Southwest had been running a fare sale for winter travel, excluding popular travel days around the holidays.

Airlines have now tried to raise prices as many as 19 times this year. Half of those attempts have failed. Airlines often roll back fare increases if enough competitors don't match them. The ones that have succeeded have brought average fares up by $58 to $70, said Citi analyst Will Randow.

The current fare hikes come as airlines begin reporting third-quarter financial results. While higher ticket prices annoy travelers, they send a positive signal to airline investors because it's a sign of strong demand. JPMorgan's Baker thinks that the rapid success of the latest fare hike -- with all major airlines raising fares in less than 24 hours -- is a sign that airlines are more optimistic than originally expected about demand through the end of the year.

Higher fares weren't enough to prevent another loss at American Airlines parent AMR Corp., which blamed high fuel costs. On Wednesday AMR reported it lost $162 million in the third quarter -- its fourth straight losing quarter. Southwest Airlines Co. is set to report results Thursday morning.

[Associated Press; By SAMANTHA BOMKAMP]

Follow Samantha Bomkamp on Twitter at http://twitter.com/samwilltravel.

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