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The Honolulu Advertiser
Posted on: Friday, July 15, 2005

Delta leads airlines in raising top 1-way fares

Associated Press


ATLANTA — Delta Air Lines Inc. blamed persistently high fuel costs yesterday as the nation's third-biggest carrier raised the cap on its most expensive fares by $100, a move that was quickly matched by several rivals. Airline stocks rose on the news.

Atlanta-based Delta boosted the cap on one-way walk-up fares to $599, up from $499, for economy class and to $699 for first class. The move comes six months after the company announced a ticket price overhaul designed to draw in more business travelers.

The adjustment also affects full-fare walk-up and some three-day advance purchases. United Airlines, Continental Airlines, Northwest Airlines and American Airlines matched the move.

"When Delta launched SimpliFares in January, crude oil was selling at $43 per barrel compared to as much as $61 per barrel in recent weeks," said Paul Matsen, Delta's chief marketing officer. "Despite our best intentions to keep the current fare caps in place, we have been forced to find ways to offset this dramatic spike in costs."

Following the nationwide launch of Delta's fares program in January, other major carriers lowered their most expensive fares as well.

Industry expert Terry Trippler, who runs a ticket fare Web site called cheapseats.com., said he expected other airlines to hike their one-way fares following Delta's changes. "You could almost bet the rent on that one," Trippler said.

He was right, with Houston-based Continental and United, a unit of Elk Grove Village, Ill.-based UAL Corp., doing so within hours of Delta's announcement.

Northwest Airlines Corp., based in Eagan, Minn., also matched Delta's fare change, spokesman Kurt Ebenhoch said. Northwest has twice before tried to raise fares above Delta's cap, by $50, but failed in being able to maintain the increase.

American Airlines, a unit of AMR Corp. in Fort Worth, Texas, did not immediately announce its plans, but Trippler said last night that American's fares had risen to match Delta's. Trippler checks the reservation systems travel agents use, which are not generally accessible outside that industry.

Delta spokesman John Kennedy said the SimpliFares program has helped draw in more business customers over the past several months, though he didn't have any hard numbers. He said that despite the changes being made yesterday, there are still many benefits to the program.

"The cap was merely part of the package so that people would know that they would never travel for more than this amount, and we've simply adjusted that," Kennedy said.

He also noted that the sales of full walk-up fares and some three-day advance purchases account for less than 6 percent of tickets the airline sells. "We had to be realistic here," Kennedy said.

Delta declined to say how much its one-way fare cap increase will generate in additional revenue.

The carrier is continuing to offer the fares without a Saturday night stay-over requirement. It also is keeping its reduction of most special service fees to $50 and 1,000 bonus miles for tickets purchased on the company's Web site.

Delta shares rose 61 cents, or 17.7 percent, to close at $4.05 on the New York Stock Exchange. AMR shares rose $1.08, or 8.4 percent, to finish at $13.87 on the NYSE, while shares of Continental Airlines Inc. gained 59 cents, or 4 percent, to $15.35. Northwest shares rose 31 cents, or 6.6 percent, to end at $5 on the Nasdaq Stock Market.