Southwest Raises Some Fares, Rivals Follow

January 3, 2007

Bookmark and Share

Several major US airlines said on Wednesday they had at least partially matched a limited fare increase last week by low-cost carrier Southwest Airlines.

The increase, which comes on the heels of a broader fare increase by carriers earlier in December, points to airlines' expectations of healthy demand and supports analysts' generally upbeat outlook for the industry this year.

Southwest said high fuel prices necessitated the December 29 fare increase, which affects about 25 percent of the carrier's passengers. "We are still very much in a high fuel environment," said Southwest spokeswoman Beth Harbin.

The carrier raised fares on routes of less than 400 miles by USD$2 each way. On routes between 400 and 750 miles, Southwest raised fares by USD$3 each way.

United Airlines, Northwest Airlines, Delta Air Lines, Continental Airlines and American Airlines each said they too had raised fares in response to Southwest's increase.

Typically, airlines tend to rescind fare increases if rivals do not match them. Last year, carriers managed to implement several lasting fare increases and investors expect them to continue doing so.