Domestic Fares Increased by Several Major Carriers

CHICAGO (Dow Jones/AP) -- American Airlines and United Airlines have raised some domestic fares by as much as $5 each way, even as jet fuel prices this year have fallen sharply.

UAL Corp. unit United's $5 each-way increase on Thursday covered all markets, except where it competes with Southwest Airlines Corp.

American, a unit of AMR Corp., raised fares the same day by $3 to $5 each way, based on the length of the flight. American said fare hikes were only on routes that compete with discount carriers.

On Friday, Delta Air Lines Corp. and Northwest Airlines Corp. also raised fares.

In a report Friday, analyst Jamie Baker at J.P. Morgan said the United plan is likely to "stick," with other airlines following suit. Discount carriers are unlikely to match the fare increases, he said.

This first fare increase by major carriers in 2007 comes after a series of fare hikes last year. Tim Wagnor, a spokesman for American, said the higher ticket prices were in "our most competitive markets, where fares haven't increased as much as in other markets."

Airlines also have gotten a break from falling jet fuel prices. Baker said spot prices on jet fuel closed at $1.62 per gallon Thursday, implying that carriers' net fuel cost, including hedging, on average is now about $1.72 per gallon.

That's well below the estimate of $1.92 per gallon that Baker used for his 2007 airline earnings forecasts.



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