Posted on: Saturday, May 10, 2003

American, United increase fares

By Eric Torbenson
Dallas Morning News

American Airlines Inc. is attempting to raise its domestic roundtrip fares by $10 but won't know until Monday if the price hike will stick.

United Airlines Inc. matched the move yesterday, but American will need Northwest Airlines Inc. — which has squashed dozens of attempted price hikes in the past few years — to match the increase.

Northwest officials couldn't be reached for comment yesterday.

Fort Worth, Texas-based American upped fares by $5 each way Thursday afternoon. The increase affects flights beginning June 1.

American needs every fare dollar. It lost $1.04 billion in the first quarter and remains close to bankruptcy, and the increases — while small — can add up because the carrier flies about 250,000 passengers daily.

The increase affects only American's "published" fares. The price hike does not affect fare sales that most vacationers use.

Delta Air Lines Inc. said it was studying the increase but had not matched it as of last night, spokeswoman Peggy Estes said.

The June 1 timing of the fare increase isn't coincidental.

As part of a federal bailout package, airlines will stop collecting a $2.50 per flight tax that finances the Transportation Security Administration.

The tax "holiday" lasts three months and is designed to help airlines recover from the effects of the Iraq war. The tax break means that airlines would be lowering the price of trips that have connections by $5 each way, or $10 roundtrip, and that the fare increase wouldn't be noticed.

American also expects to receive $350 million or more in federal government aid next Friday to compensate it for the cost of security improvements on airplanes and at Dallas/Fort Worth International Airport.

Under American's fare increase, direct American flights such as those taken from DFW actually would increase in price because those fliers pay just $5 per round trip in security tax and the fare increases are $10 per round trip.