Source AP ©

US airline industry rises fares

The U.S. airline industry rises many one-way fares by up to $10 (7 EUR) late Monday, as carriers struggle with weakening domestic results, though success in making increases is scant.

Late Monday, Continental Airlines Inc. raised one-way fares in 30 percent of the top U.S. markets by $5 (3.69 EUR) for advanced-purchase tickets and by $10 (7 EUR) for last-minute seats, according to farecompare.com, an airfare tracking Web site. That triggered competitors American Airlines, Delta Air Lines, Northwest Airlines, United Airlines and US Airways to match on overlapping routes, as well on some routes out of hub airports.

It is the industry's fifth or sixth attempt to increase fares this year, said Rick Seaney, chief executive of farecompare.com. If it succeeds, it would be the year's first, as prior attempts unraveled within a week after low-cost carriers refused to join in, he said.

Last year, when carriers were flush amid strong demand and relatively flat capacity of airplane seats, Seaney said almost all the industry's attempts succeeded. There were about seven.

By the count of Jamie Baker, a JP Morgan analyst, the big network airlines have tried to raise fares seven times this year, with two successes. Baker also wrote in a research report that low-cost carrier AirTran Holdings Inc. was the first to raise fares Monday, increasing one-way fares by $5 (3.69 EUR) to $10 (7 EUR) by midday.

He described the industry's most recent attempt as a small fare increase. American Airlines raised about 6,000 fares. A typical broad-based increase covers about 300,000 fares, he wrote.

"Given increasingly poor sector sentiment, news of AirTran's fare increase may lift the spirits of some, though we ascribe little fundamental value to the effort," Baker wrote.

Investors have hammered airline stocks recently amid flagging domestic results, hurt by sharp competition from low-cost carriers and higher fuel costs.

Continental said late last week its overall passenger unit revenue - an important industry gauge measuring revenue divided by capacity - fell an estimated 0.5 percent to 1.5 percent from May 2006 levels. Analysts said Wall Street expected about 1 percent growth.

Continental is the lone major U.S. airline to report its unit-revenue trends monthly, and the relatively weak results helped drag down stocks across the industry Monday.

Airline shares were mixed in Tuesday morning trading, with the Amex Airline Index split among five gainers and six decliners.

Among the biggest index gainers, Continental rose 51 cents to $37.95.

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