Airlines Raise Airfares As Travelers Flock to Airports

Airfares continued to soar this week as oil prices rose and summer travelers filled airplanes, and travel experts warned that prices will likely remain high in the near future.

Southwest Airlines has raised one-way fares by as much as $10 in recent days. The airline increased fares on medium-length flights by $3 and long trips by $10. The airline also lifted its maximum fare to $319 each way from $309.

Other airlines, including American Airlines and discount carriers AirTran Airways and Frontier Airlines, have matched the price increase.

"It goes back to the core problem, and that's the soaring price of fuel," said Ed Stewart, a Southwest spokesman.

The airline expects to pay up to $800 million in additional fuel costs this year, he said.

"There's no way around it," he said. "It has to be passed on to the customer."

Oil prices moved above $75 per barrel Wednesday, reaching a record high.

It was the fourth time this year that Southwest has raised fares. Airline analyst Jamie Baker of J.P. Morgan Securities said fares across the industry are likely to continue to rise, given Southwest's need to offset its rising fuel costs.

"Southwest's full-court press for higher fares is a phenomenon we expect to continue for many years," he said in a note to investors.

Fares showed signs of rising broadly Wednesday, according to Travelocity, an Internet travel firm that tracks fares.

More than 57,000 markets showed an increase in airline ticket prices Wednesday, compared with fewer than 6,000 that showed a drop in price, according to Travelocity.

And the trend appears to be continuing through the end of the summer, said Simon Bramley, the firm's vice president of flights. He said fare sales that typically begin showing up for the last weeks of August have yet to materialize.

"There is noticeably less fare sale activity this year compared to the last couple years," he said. "At this point, I'm telling people that if they see a great deal, snap it up, because it won't be around for long."

Passenger demand remains strong amid the price increases.

Southwest reported a jump in traffic during June. The airline said passenger traffic was up 13 percent for the month, and airplanes flew 80 percent full - up from 76 percent in June 2005.

Other airlines, including Continental Airlines and AirTran, also reported hefty increases in traffic.

American's mainline traffic was flat compared with June last year, although its planes, on average, flew about 85 percent full, compared with 83 percent a year ago. Traffic on American Eagle, the carrier's regional partner, was up 13 percent for the month.

Baker said he remains hopeful that the industry is improving, despite the crushing fuel prices.

He pointed to the June revenue report from Continental. That airline said its revenues for the month were up as much as 10 percent compared with June 2005.

Continental is the only major airline that breaks out its revenues on a monthly basis, and it is generally considered an industry bellwether.

The results were "indicative of continued industry demand recovery," Baker said.

Shares of AMR Corp., American's parent , closed at $26.06 in trading Wednesday, up 46 cents. Southwest shares finished at $16.60 per share, up 13 cents.



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