Major airlines raise domestic fares

updated 1:35 p.m. ET Oct. 19, 2007

NEW YORK - United Airlines raised round-trip fares by $10 to $20 on nearly all of its domestic routes, prompting similar moves by several major carriers Thursday.

The increases are the latest in a series of price hikes by U.S. carriers, which have finally regained their financial footing after years of hard times.

The airlines say they need to raise ticket prices to keep pace with rising fuel costs. But the increases are also a sign that travelers seem willing to pay increasingly higher fares even as they complain about stuffed planes and flight delays.

"It's a perfectly ripe time to increase because demand is still strong and restrained capacity makes it easy," said Rick Seaney, chief executive of FareCompare.com, a Web site that monitors changes in airfares.

A United spokeswoman said the Chicago-based carrier raised one-way fares by $5 on most routes under 1,500 miles and $10 on flights longer than that late Wednesday. About 90 percent of the carrier's domestic routes are included in the increase, she said.

"Fares are still relatively low despite the cost of fuel, which has become our largest expense in operating flights," said the spokeswoman, Robin Urbanski.

Most major airlines followed United with similar increases Thursday morning, according to data compiled by FareCompare.com.

Delta Air Lines Co. spokeswoman Betsy Talton said the carrier was among those that raised fares, but she did not say what portion of routes were affected. Certain "select markets" were not included in the increase, she said.

Seaney said all of the major legacy carriers except American Airlines and Northwest Airlines Corp. had raised at least some of their fares to match United's increase.

American Airlines, operated by AMR Corp., last week raised many domestic fares by $5 one-way, but left prices unchanged on routes where it competes with low-cost carriers. That increase sparked a round of price jostling by competitors.

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Then on Monday, Southwest Airlines Co. raised fares $10 each way on longer flights to and from Dallas Love Field, its hometown airport. American and others matched the increase shortly afterward.

Airlines have also recently raised fares to and from Hawaii.

This week's increases by United are significant because they apparently include routes served by discount carriers such as Southwest and Frontier Airlines Holdings Inc.

"We believe that discounter-led increases remain more relevant, given they tend to affect the lower-end/higher-volume portion of the fare structure," JPMorgan airline analyst Jamie Baker said in a note to investors Thursday.

The increase, if it sticks, would mark the eighth time major carriers succeeded in raising prices this year, Baker said.

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