United, Continental, Delta raise fares again

[October 25, 2011]  DALLAS (AP) -- The nation's biggest airlines are raising their fares again.

United, Continental and Delta added up to $5 each way to ticket prices for many flights within the U.S. It's the second hike in a week after more than two months when base fares were largely unchanged.

Airlines have tried to raise prices about 20 times this year, and about half the hikes have stuck. Airlines often roll back price increases if key competitors don't match them.

J.P. Morgan analyst Jamie Baker said he would be surprised to see low-fare carriers such as Southwest Airlines Co. match the increases, which means there's a strong chance the latest hikes will be rolled back.

But Baker said even the attempt showed that demand for travel remained strong.

A spokesman for United Continental Holdings Inc. confirmed that those two airlines raised fares by $2, $3 and $5 each way, depending on the length of flight and type of ticket.

A Delta Air Lines Inc. spokesman confirmed that his airline raised all fare categories by $5 each way for flights longer than 1,500 miles.

Airlines have been scaling back growth plans for fear that demand will fall if economic growth slows further. By making fewer seats available, airlines gain the power to raise prices if demand holds steady.

Even before the latest hikes, a Citigroup analyst calculated that this year's fares are between $58 and $70 higher than last year's.

All of which is bad news for travelers hoping to book holiday-season trips.

Meanwhile, airlines are lobbying against proposals to increase airline taxes and departure fees, complaining they will hamper demand, even though the departure fee would amount to less than $1 per passenger on a mid-size plane such as a Boeing 737.

Robert Mann, an aviation consultant in Port Washington, N.Y., said higher fares could discourage budget-conscious consumers from flying.

"These fare increases, part of the 11 successful fare increases so far in 2011, have destroyed more price-sensitive demand than any proposed $100-per-flight fee," Mann said.

[Associated Press; By DAVID KOENIG]

Follow David Koenig at http://twitter.com/airlinewriter.

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