Discount leader Southwest Airlines, which uncharacteristically raised its fares six times in 2006, raised them again Monday by as much as $10 each way for its longest flights.
The carrier's first price increase of 2007 follows a $2 and $3 price increase implemented just before New Year's.
Monday's increase was quickly matched by American, Continental and Northwest. Each of the three airlines had led or participated in failed efforts to increase prices industrywide in the past three weeks.
Other big airlines also were expected to follow, because Southwest, with its industry-leading low costs, typically sets the floor for prices in the markets it serves.
The $10 increase each way applies to Southwest's routes of 1,000 miles or longer. On routes of 401 to 999 miles, Southwest raised its standard price by $3 each way.
On shorter routes, the increase was $2 each way. Routes to and from Dallas Love Field, Southwest's home airport, saw no price increases.
Overall, nearly 70% of Southwest's routes were affected by the fare increase.
On a down day for the market, Southwest shares closed at $15.77, up 4.1%. The AmEx Airline index climbed 1.1% Monday.
The airline earned $57 million in the fourth quarter of 2006, down from $70 million in the year-earlier period.
Southwest is the only carrier to report profits in every quarter since the Sept. 11 attacks, but it faces increasing pressure to raise revenue.
JPMorgan airline analyst Jamie Baker told clients in a note that he expects "a full-court press for higher revenue" from Southwest, and said that it could last for several years, "given its confluence of rising labor and fuel costs."
Fares watcher Terry Trippler, of MyVacationPassport.com, had a similar view. "They're getting hit by fuel prices like everyone else, and they're responding like everyone else," Trippler says. "I think we'll see more (Southwest fare increases) this year."
Fares guru Tom Parsons, publisher of BestFares.com, says Southwest's price increase still rates as modest compared with what most traditional airlines have done with their prices in the past two years.
Southwest's top fare now is $339 one way for a coast-to-coast flight, vs. $299 in January 2005.
Parsons says most traditional carriers charge around $700 for coast-to-coast coach flights that, like Southwest's top fare, require no advance purchase. Two years ago, their price for such flights was $499.
That means Southwest bumped up fares by about $40 over a period in which other airlines increased them by about $200, he says.
