No inflation? Rivals quickly match Southwest air fare hike

Airline Rivals Match
Southwest Fare Hike

By Matt Curry
Associated Press
via Yahoo News
Tuesday, September 4, 2007

http://news.yahoo.com/s/ap/20070905/ap_on_bi_ge/airline_fares;_ylt=ArYtZ...

DALLAS -- U.S. air carriers increased fares on 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 select short and medium-haul markets. The $10 one-way increase is in markets of more than 1,250 miles, including Albuquerque, N.M., to Baltimore, the company said.

"It is a small increase to mitigate cost," said Whitney Eichinger, 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, spokesman for Fort Worth, Texas-based American Airlines, the nation's largest carrier. American is a unit of AMR Corp.

United Air Lines, 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 loads 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 terror 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 Tuesday. AMR stock increased 48 cents, or almost 2 percent, to $24.99. UAL shares rose 38 cents to $47.85. US Airways shares rose $1.61, or 5.2 percent, to $32.56. Delta stock rose 65 cents, or 3.9 percent, to $17.53. Northwest Airlines shares increased 49 cents, or 2.6 percent, to $19.07.

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