Northwest rescinds 4% price increase Rest of industry had quickly matched boost in leisure fares

August 20, 1998|By BLOOMBERG NEWS

ST. PAUL, Minn. -- Northwest Airlines Corp. rescinded a 4 percent leisure fare increase on U.S. flights yesterday, reversing a surprising move in which the fourth-largest U.S. airline had spurred an industrywide price boost.

Most major U.S. airlines increased fares on tickets purchased seven, 14 and 21 days in advance yesterday after Northwest initiated the boost. St. Paul, Minn.-based Northwest had declined to go along with previous increases by other carriers.

Analysts had said they expected the fare increase, the seventh such attempt this year, to hold because Northwest is participating for the first time.

The move to pull back the increase might have been triggered by community concern at Northwest's hub cities, which face the threat of a strike by the airline's pilots.

"They might have been under a lot of local political pressure in Detroit and Minneapolis," said Candace Browning, an airline analyst at Merrill Lynch & Co.

The airline confirmed that it had scrapped Tuesday's increase but declined to comment further.

A spokesman at the largest U.S. carrier, United Airlines, said it was studying the development and hadn't decided yesterday whether to rescind its fare increase. At the second-biggest U.S. airline, AMR Corp.'s American Airlines, a spokesman said the carrier hadn't revoked its increase.

Airlines are forbidden to agree to raise their fares simultaneously, but they typically follow suit when rivals increase or decrease fares.

Pub Date: 8/20/98

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