World's airlines seek fare increases Soaring fuel costs from gulf crisis cited

November 06, 1990|By New York Times News Service

The world's airlines agreed yesterday to seek fare increases of up to 8 percent on international flights.

The carriers said the higher fares, which would mark the second round of increases since the Persian Gulf crisis began three months ago, are needed because of higher fuel costs.

Meeting in Geneva, members of the International Air Transport Association, which represents about 200 airlines, agreed to raise fares by 4 percent to 8 percent.

In August, the trade group said it would raise fares 5 percent to 8 percent, an increase some airlines carried out this month.

Domestic carriers have put through fare increases of about 9 percent since the Iraqi invasion of Kuwait sent fuel prices soaring.

Critics contend that the trade group, which represents most of the world's leading airlines, is little more than a cartel. Its recommendations on fares are almost always accepted by its members, many of which are state-owned airlines.

U.S. airlines are allowed to participate in the group under antitrust immunity from the Transportation Department.

Chris Witkowski, executive director of the Aviation Consumer Action Project, based in Washington, said the fare increases may be justified but objected to what he called price-fixing by the trade group.

"It's anti-competitive and artificially raises prices for the consumer," he said.

Jet-fuel prices, after rising from 60 cents a gallon before the invasion to as high as $1.50 a few weeks ago, have settled at about $1.

Still, the industry faces $5 billion to $10 billion in added fuel costs this year, and this month's fare increases were not enough to recover the added expense, said Robert Aaronson, president of the U.S. arm of the trade group.

Many analysts agreed that the airlines need to raise rates once again to salvage what is becoming a dismal year for the industry.

Under the increases, a one-way business-class fare from New York to London would go from $1,700 before the Persian Gulf crisis to as much as $1,972.

The one-way coach fare from Los Angeles to London would go from $747 to as much as $866.

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