Airlines increase round-trip fare by $20

By Lynne Marek
Bloomberg News Service

HOUSTON — U.S. airlines, led by Continental Airlines Inc., raised leisure fares for the first time since the Sept. 11 attacks reduced demand and generated record losses.

Continental, the fifth-largest U.S. carrier, raised round-trip leisure fares by $20 last night and was matched by American Airlines, Delta Air Lines Inc. and Northwest Airlines Corp. on some or all of their routes. While some analysts questioned whether the increase would last because of Northwest's limited participation, others said carriers need the revenue boost.

"We've been saying for a long time that we needed airfares to go up because the airlines couldn't make money," said Buckingham Research analyst Helane Becker.

Airlines cut fares after the attacks to spur travel demand. Passenger traffic fell as much as 40 percent shortly after the attacks and was down 9.8 percent in this year's first three months. Discount fares have helped rebuild demand while business travel at higher fares has remained weak. U.S. carriers had an estimated $2.2 billion loss in the first quarter, analysts said.

AMR Corp.'s American, the world's largest carrier, matched on all its U.S. flights and not just routes where the carriers compete, said spokeswoman Sonja Whitemon. Northwest matched in a limited number of markets and only on some fare types, spokesman Kurt Ebenhoch said. Delta matched only on routes where it competes with Continental, said spokeswoman Peggy Estes.

Spokesmen for UAL Corp.'s United Airlines, the second-largest carrier, and America West Airlines Holdings Corp. said their companies are studying the increase. US Airways Group Inc. didn't have an immediate comment.

Continental's move is well timed because it comes just ahead of the carriers' busiest season, the U.S. summer vacation period, analysts said. "I would expect by Monday morning most of the industry will have matched," Becker said.