NEW YORK – Delta Air Lines Inc. (DAL) and AMR Corp's (AMR) American Airlines raised fares by $5 each way in most domestic markets, the No. 3 and No. 1 U.S. airlines said Friday, in the latest test of airline pricing power.
U.S. airlines have struggled recently to raise fares to offset rising fuel costs, as competitors have failed to match the increases amid softening demand for air travel.
But this time could be different.
"Given the continued rise in jet kero prices, we ascribe a greater-than-usual probability of competitive matching," JPMorgan analyst Jamie Baker said in a research note.
Yet he expects the increase to be rolled back in markets in which Delta and other traditional carriers face low-cost competition such as Southwest Airlines Co. (LUV) and AirTran Holdings Inc. (AAI).
Low-cost carriers typically don't match price increases initiated by traditional airlines.
Northwest Airlines Corp. (NWA) and UAL Corp's (UAUA) United Airlines said they were studying Delta's increase. Other carriers were not immediately available for comment.