United rejoins rivals in $10 airfare hike

UAL Corp.'s United Airlines on Monday joined the five largest U.S. carriers in raising round-trip fares $10 in response to higher fuel costs.

Delta Air Lines Inc., Continental Airlines Inc., Northwest Airlines Corp. and US Airways Group Inc. adopted the increase last weekend after it was initiated by AMR Corp.'s American Airlines, the world's largest carrier.

The increase marks at least the seventh time this year that so-called legacy airlines such as American have boosted ticket prices. Southwest Airlines Co., the largest low-fare carrier, has led five other increases as carriers grapple with rising fuel prices.

"Discounter-led increases are more relevant, given they affect the lower end of the fare spectrum, where greater passenger volumes occur," Jamie Baker, a JPMorgan Chase & Co. analyst based in New York, said in a report Monday.

Labor and fuel are airlines' largest costs. A 1-cent-a-gallon increase in the price of jet fuel adds $30 million to annual expenses at Fort Worth-based American.

United, the second-largest U.S. airline, initially adopted the increase Friday, then rescinded it Sunday, spokesman Jeffrey Kovick said. The Chicago-based carrier reinstated the higher fares to remain competitive with other airlines.


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