CHICAGO – Major U.S. airlines have boosted fares in some domestic markets, matching an increase initiated by low-cost carrier AirTran Airways, airlines, analysts and travel Web sites said on Tuesday.
The increase of $5 one-way for advance purchases and $10 one-way for walk-up and business fares was launched in some markets on Monday by low-cost carrier AirTran, a unit of AirTran Holdings (AAI).
The fare hike marks the latest test of pricing power by airlines that have struggled this year to continue a 2006 string of fare hikes to boost revenue and offset skyrocketing jet fuel prices.
The airline industry has been battered in recent years by low-fare competition and high costs. A recovery that began in 2006 may be in jeopardy as carriers are having an increasingly hard time initiating lasting fare hikes.
JP Morgan airline analyst Jamie Baker said in a research note that the increase may provide a slight boost in sentiment for the airline sector, given that recent fare hikes have been spoiled by low-cost carriers like AirTran and Southwest Airlines (LUV).
"There have been over a dozen successful domestic increases in the past year, and yet travelers are paying less than they were 12 months ago," Baker said. "Accordingly, we're disinclined to ascribe much fundamental value to yet another effort."
He added that five of seven attempts this year by legacy carriers have unraveled do to lack of matching by discount airlines.
Fare tracker Farecompare.com said other airlines that matched in some markets include Continental Airlines (CAL), Delta Air Lines (DAL), Northwest Airlines (NWA), UAL Corp's (UAUA)United Airlines and US Airways Group (LCC).
Airline shares were slightly higher on Tuesday, with the Amex airline index near flat.