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VOL. 126 | NO. 32 | Wednesday, February 16, 2011

Delta, American Boost Some Air Fares by Up to $120

DAVID KOENIG | AP Airlines Writer

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DALLAS (AP) – Delta and American are raising the price of some tickets favored by business travelers up to $120 per round trip.

Fare experts said Delta started the increase on Monday and was matched by American.

It's the second big increase in fares in as many weeks. Airlines eliminated many flights when oil prices were high and the economy was weak, giving them power to raise fares now that planes are more crowded and travel demand is rebounding.

JP Morgan analyst Jamie Baker said it made sense for Delta and American to target corporate travelers, who are considered less sensitive to price increases. He said it also might indicate that airlines have raised vacation fares as much as they can without causing a loss of revenue – presumably by hurting ticket sales.

American Airlines spokesman Ed Martelle said the increases covered first-class, business-class and 7-day advance-purchase tickets. Flights up to 500 miles were boosted $20 each way, those from 501 to 1,500 miles were raised $40 each way, and flights longer than 1,500 miles increased by $60 each way, he said.

"We're responding to the Delta initiative," Martelle said when asked why American, a unit of AMR Corp., was raising prices.

Delta Air Lines Inc. did not have an immediate comment.

Last week, United and Continental led an increase of $20 to $60 per round trip on pricey tickets typically bought by business travelers. Delta and American both matched that hike last week.

Rick Seaney, CEO of FareCompare.com, said that like last week's increase, the Delta-led boost on Monday was aimed mostly at high-end fares – about $800 per round trip – that are typically bought by corporate travelers, not vacationers.

It was unclear whether other airlines would match Delta and American on the latest increase, which also covered so-called instant-upgrade seats in coach. Baker said low-fare airlines wouldn't be able to block this increase by not going along with it because the tickets are sold at prices far higher than the discount carriers typically charge.

Airlines also are worried that leisure travel could be hurt if airports are allowed to raise fees on air travelers. President Barack Obama's budget proposes to let big airports charge passengers up to $7 per flight segment, up from $4.50, to pay for capital projects such as runways.

Baker said the higher charge or a proposed boost in security fees to $5.50 per segment in 2014 from $2.50 now could depress airline revenue per seat mile by 1 percent to 2 percent. He said the biggest impact would fall on budget-conscious travelers such as those who fly on Southwest Airlines Co.

A seat mile is an airline industry measure of passenger-carrying capacity – one seat flown one mile.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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