Fort Worth-based American Airlines joined several other carriers in restoring the higher prices, which apply to most tickets for domestic travel.
Fares had initially been raised Friday, in a move led by Continental Airlines. Other major hub carriers matched the increase over the weekend, but on Monday, Delta Air Lines canceled the fare hike. That led the other carriers to lower prices as well to remain competitive.
But Tuesday, Delta jacked prices up again, and the other carriers followed suit. If the higher fares stick this time, it will be the third price increase this month.
The added revenue from higher fares is badly needed as the industry falters under crushing fuel prices, said analyst Jamie Baker of J.P. Morgan Securities.
"The recent flurry of fare activity is a step in the right direction," Baker wrote in an investment report Tuesday.
Baker said the fare increases would offset as much as $5 per barrel in the price of crude oil. While not enough to eliminate the fuel problem -- oil prices have topped $55 per barrel recently -- "it's the industry's first meaningful and likely successful effort to boost paid fares in nearly three years," he said.
Gerard Arpey, American's chief executive, said the fare increases were a bright spot in an otherwise difficult time. Speaking to Wall Street analysts, Arpey said the airline faces continued pressure to cut costs and boost revenue.
"2005 is shaping up to be the challenging year we all expected," he said.
He warned that fuel prices will continue to be the most daunting obstacle to the airline's turnaround. If prices remain at their current levels, he said, American will spend $1.4 billion more for fuel this year than it did in 2004.
And that's on top of a $1.1 billion increase in costs that the airline paid last year over 2003.
One event that hasn't hurt American as much as expected is a broad drop in business fares that was implemented this year. American lowered its last-minute fares by as much as 50 percent in January, following the lead of Delta.
At the time, some analysts predicted that the move could cost the company as much as $500 million annually. Arpey called those estimates "exaggerated" and said revenue hasn't been as low as expected.
"So far, the results are beating our expectations," he said.
The strongest results have been in Miami, where American had lost significant market share to discount competitors operating from Fort Lauderdale Airport. Revenue from that airport has actually improved since fares were lowered, he said.
At O'Hare Airport in Chicago, American has drawn passengers away from nearby Midway Airport, which is a major facility for Dallas-based Southwest Airlines, the nation's largest low-fare carrier.
Even Dallas/Fort Worth Airport, where the damage was expected to be the worst, has exceeded expectations, Arpey said. "We've been hardest hit at D/FW, but unit revenue has performed a little better than we expected," he said.
