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Last major airline matches fare boost

By Bobby White
Knight Ridder Newspapers

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Continental Airlines became the last of the major hub-and-spoke carriers to match an increase launched Wednesday by American Airlines. Fares are $5 higher for one-way trips and $10 higher for round trips.

Tom Parsons, who runs the Bestfares.com Web site and magazine, said he wouldn't be surprised if airlines tried to raise prices again next week.

"The floodgates may have just opened," he said.

The airlines have tried several times to raise fares, but rescinded the increases after at least one major competitor — often, Northwest Airlines — didn't follow suit.

This time, Northwest went along with the increase.

"Traditionally, it was Northwest which reined in efforts," Parsons said. "Not this time. Carriers are probably saying, 'Hey guys, we just got the green light.' "

Discounters such as Southwest Airlines didn't match the increase. That means markets served heavily by discounters, such as Los Angeles, won't feel the price increase as much, Parsons said. But he expected the price increases to stay in effect elsewhere.

In a recent financial update, American said its unit revenues for the third quarter will be down as much as 3.5 percent from the same period last year. Conversely, unit costs for the quarter are expected to rise compared with last year. The reason for the cost increase was fuel prices.

The company reported that rising fuel costs actually cost it an additional $1 billion in 2004.

The third quarter typically is marked by uplifting results, given July and August travel. But this year, Florida, a popular destination for travelers, was pounded by hurricanes.

Copyright © 2004 The Seattle Times Company

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