Hurricane drives up price of jet fuel

airlines raise fares

United, Delta, Continental post increases

JetBlue, Southwest make no move

Katrina's Wake

September 03, 2005|By BLOOMBERG NEWS

NEW YORK - U.S. airlines raised fares yesterday as Hurricane Katrina drove jet fuel prices higher and shortened the time that Northwest Airlines Corp. said it has to avoid bankruptcy.

UAL Corp.'s United Airlines, the second-largest carrier, raised round-trip fares $10 to $30, depending on the length of the trip, said spokesman David Dimmer. The increase includes leisure, business and international fares.

Delta Air Lines Inc., the third-largest U.S. carrier, matched United in several markets, and Delta and Continental Airlines Inc. put in separate round-trip increases of $10 on routes with low-cost carriers, company spokeswomen said.

"Fuel is going up; it's about time somebody made a move," said Terry Trippler, who monitors fares for the online travel Web site CheapSeats.com. "They've got to raise" fares. Airlines have increased fares several times this year, he said.

Jet fuel rose to $2.40 a gallon in New York trading yesterday, up 25 percent since Aug. 26, the last day of trading before Katrina hit Louisiana, Mississippi and Alabama four days ago.

Low-fare carriers Southwest Airlines Co. and JetBlue Airways Corp. haven't matched rivals' increases.

"So far, the fare increases haven't come close to offsetting" the recent jumps in oil prices, said Clark Orsky, a fixed-income analyst with KDP Investment Advisors in Montpelier, Vt.

Northwest, the No. 4 U.S. carrier, said in a filing Thursday that fuel prices have shortened the amount of time it has to reduce costs and avoid filing for bankruptcy protection. Delta also has warned it may seek bankruptcy. United and US Airways Group Inc. are operating in Chapter 11. US Airways increased fares $10 to $30 round-trip, depending on the length of the flight, spokeswoman Amy Kudwa said.

Northwest increased round-trip fares in many markets by $10, while US Airways raised them by $30 in some markets, Trippler said.

America West Holdings Corp. increased a few fares $10 round-trip, but AMR Corp.'s American Airlines, the largest U.S. carrier, had yet to make a move, Trippler said. Southwest Airlines Co., the sixth-largest carrier, hasn't matched rivals. "It's something we're certainly looking at," said Linda Rutherford, a company spokeswoman. "The increase in jet fuel prices has us concerned."

Spokesmen for Northwest, American, America West and JetBlue Airways Corp. didn't immediately return telephone calls.

Airline fuel costs this year will rise nearly a third, to $28.1 billion, from $21.4 billion in 2004, the Air Transport Association airline trade group estimated Monday. Fuel is generally airlines' second-largest expense after labor.

The airline industry's fuel costs averaged $11.8 billion from 1992 through 2001, the Washington-based trade group said.

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