Airlines raise business fares up to $30 each way

NEW YORK (Reuters) -- U.S. airlines, led by Delta, have increased business fares, those requiring little or no advance purchase, by up to $30 each way in the fifth fare increase this year.

Two factors contributing to airlines' fare hikes this year have been high demand and high fuel prices. Oil prices, however, have fallen somewhat since the last increase, a $10 each way fuel surcharge introduced last month.

Delta increased fares late last week and by Monday all major airlines, except for low-cost carrier Southwest Airlines, had substantially matched them, fare experts said.

Southwest generally does not go along with fare increases by the other large carriers, which keep their fares low in markets in which they compete with Southwest.

A flight from Washington to San Diego, for instance, now costs $1,104 each way without an advance purchase, plus $20 each way in fuel surcharges, said Tom Parsons, who follows airline fares for online travel company Bestfares.com.

By contrast, a flight from nearby Baltimore to San Diego, a market in which Southwest operates, costs $315 one way, and lacks a fuel surcharge.

Flights of under 1,000 miles saw increases of $10 or $20 each way, depending on the length of the flight.

Carriers matching the increases included United Airlines, American Airlines, Northwest Airlines, Continental Airlines, US Airways and America West Airlines, which together handle more than 80 percent of the domestic market.

The most recent fare increases target only business travelers because leisure travelers tend to buy the cheaper, more restricted and nonrefundable 7-, 14-, or 21-day advance-purchase fares.

"While each successive increase seems to tempt fate, in the short term the airlines have not found the limit to what corporations will bear," said airline analyst Sam Buttrick, of PaineWebber, in a research report.

It is "the airlines' job to push that limit and the corporations' job to know when to say no," he added.

Copyright 2000 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

See related sites about TRAVEL

Note: Pages will open in a new browser window

External sites are not endorsed by CNN Interactive.