Most Southwest Fares are Raised

Southwest Airlines is raising fares as the airline becomes more exposed to high fuel prices, a move that likely means higher prices for travelers who fly any airline competing with the discounter.

Executives with Dallas-based Southwest said Monday that they had raised fares between $1 and $3 each way on most flights.

The increases were $3 for routes longer than 750 miles, $2 for those 400 to 750 miles and $1 for some flights shorter than 400 miles.

The airline's $299 cap on all fares remains in place, spokeswoman Beth Harbin said. Fares in some markets where sales are going on, such as Denver and Dallas, remain unaffected, she said.

It was Southwest's first increase since September.

"We have to balance our desire to be the low-fare leader with the cost pressures in front of us," Harbin said.

The increase was modest compared with recent increases at other major airlines, including American Airlines, which has raised prices numerous times in the past year.

Other discount carriers have also increased prices recently, including JetBlue Airways, which raised fares $5 each way last week.

Gary Kelly, Southwest's chief executive, said last week that he remained committed to improving earnings by 15 percent, even with higher fuel costs. Most analysts said that would likely require higher fares.

Last year, Southwest was shielded from most of the oil-price increases thanks to contracts that allowed it to buy fuel at cheaper rates. But some of those contracts expired at the end of 2005, reducing that protection.

The airline's fuel prices per gallon will be up nearly 60 percent, Kelly said. That should mean $600 million in additional costs.

The price increase will likely mean more expensive fares on competing airlines as well, because Southwest typically sets the lowest fare on any particular route. That will help the entire industry, said analyst Jamie Baker of JP Morgan Securities.

"Our confidence continues to increase as fares collectively inch higher," Baker wrote in a report Monday. "To us, this suggests still-ample opportunity for higher domestic fares, without approaching the egregious pre-2001 levels that travelers revolted against."

Shares of Southwest (ticker: LUV) closed at $16.41 Monday, up 9 cents.

Fort Worth Star Telegram


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