Airlines propose a new round of fare hikes

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Posted at 4:35 p.m. PDT Friday, September 8, 2000

Airlines propose a new round of fare hikes

DALLAS (AP) -- Four of the nation's five largest airlines have raised domestic fares by adding a surcharge of $20 per round trip, which they said was needed to cover the higher cost of jet fuel.

Continental Airlines moved first, posting the higher domestic fares Thursday. By Friday, the nation's three largest carriers -- United, American and Delta Air Lines -- had indicated they would match the increase.

Northwest Airlines, the No. 4 carrier, and Trans World Airlines said they were watching the situation. Analysts said Northwest could torpedo the surcharge increase by refusing to go along.

Jet fuel prices have been rising along with the price of crude oil, which reached 10-year highs this week. The benchmark futures contract for crude oil closed sharply lower Friday on the New York Mercantile Exchange, however, falling $1.76 to $33.63 per barrel.

The move this week by four of the major carriers doubled a $20-per-round-trip fuel surcharge they imposed in January.

``The surcharge is certainly justified by the enormous run-up in jet fuel costs,'' said PaineWebber airline analyst Sam Buttrick. ``But that doesn't mean consumers will continue to book eagerly.''

A spokesman for Southwest Airlines, the nation's largest discount carrier, said the Dallas-based airline did not plan to raise a $2-to-$6 per round trip fuel surcharge it enacted in March.

As a result, the major carriers were not raising their fuel surcharge on routes flown by Southwest and other discount carriers, said Tom Parsons, editor of travel Web site Bestfares.com.

Parsons predicted that the additional charge could push more travelers, especially families, to secondary airports served by the discount carriers. For example, when surcharges are included, fares from Washington's two airports to San Diego are now nearly double the fares from Southwest's hub at Baltimore-Washington International Airport, he said.

In addition to the fuel surcharge in January, airlines pushed through a broad fare increase in March and a limited increase in May. But carriers saw occupancy rates on their planes rise this summer.

http://www.mercurycenter.com/breaking/docs/071206.htm

-- Carl Jenkins (Somewherepress@aol.com), September 08, 2000


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