Low-Cost Airlines Raise Fares on Higher Fuel Costs

A slew of discount airlines raised fares through the weekend and on Monday, including low-fare king Southwest Airlines, as fuel costs continue to rise.


A slew of discount airlines raised fares through the weekend and on Monday, including low-fare king Southwest Airlines, as fuel costs continue to rise.

The rare move by Dallas-based Southwest underscores the damage that high oil prices are doing to the airlines, even lean, low-cost carriers. Southwest raised its round-trip fares between $4 and $8.

The airline's most-expensive fares remained capped at $299 each way.

"The astronomical cost of fuel continues to increase on a pretty regular basis here," Southwest spokesman Ed Stewart said.

Southwest is the only large airline with significant protection against rising oil prices because of a hedging program that locks in more than 80 percent of its fuel purchases at lower prices. But high prices are having an outsized impact on the purchases the airline must make on the open market.

"Even with our hedges in place, the cost of fuel has gotten so high that a fare increase became necessary," Stewart said.

It's the second time this year that Southwest has raised fares. The first was in March.

Other low-fare airlines have raised some or all fares, including AirTran Airways, America West Airlines, ATA Airlines, Frontier Airlines, JetBlue Airways and Spirit Airlines.

The major hub airlines, including Fort Worth-based American Airlines, also raised fares last week. Northwest Airlines rescinded some of its fare increases over the weekend, but as of Monday, none of the major carriers had followed suit.

Southwest shares (ticker: LUV) rose 4 cents Monday to close at $13.68. Stock in AMR Corp., American's parent company, (AMR) rose 12 cents to close at $13.40 per share.

Copyright 2005 Associated Press

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