Airlines raise fares 10%, anticipating renewed tax Clinton expected to sign bill reviving levy today


CHICAGO -- Major U.S. airlines raised domestic fares 10 percent over the weekend in anticipation of a 10 percent excise tax that President Clinton is expected to sign into law today.

Carriers also cited higher security costs and strong demand as reasons for the increase.

"There is a huge demand for fall bookings," said Sarah Oates, a spokeswoman for Continental Airlines Inc.

Continental, UAL Corp.'s United Airlines, Delta Air Lines Inc. and AMR Corp.'s American Airlines were among the major carriers confirming the fare boost.

The increase covers domestic unrestricted coach tickets, usually purchased for business purposes close to the day of departure, and domestic advance-purchase tickets. International fares and special promotions and sale fares already in effect are excluded.

Airlines have not paid the excise tax since Dec. 31, when the federal government failed to renew it during stalled budget negotiations. Some analysts say airlines' earnings for the past few quarters were inflated because carriers continued charging customers an additional 5 percent to 6 percent.

AMR Chairman Robert Crandall told Bloomberg Business News last week that higher fares will trigger a decline in passengers. The increases "will keep a lot of people at home," he said.

The excise tax is attached to a minimum-wage bill that Clinton is expected to sign into law today. The tax will take effect in seven days.

Also yesterday, Southwest Airlines announced that it has reinstated its popular `Friends Fly Free` companion fare program for a limited time. With the purchase of one full, unrestricted fare ticket, a friend can go along free.

The Friends Fly Free fares are available in all 48 cities served by Southwest Airlines, but seats are limited.

Tickets must be purchased by Oct. 31, within one day of making a reservation, and at least one day before departure. Travel is good through Jan. 6.

Pub Date: 8/20/96

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