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Airlines making new attempt to raise fares

11:29 PM, Feb 22, 2013   |    comments
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U.S. airlines are increasing fares aimed at business travelers.

If all the carriers hold their ground, it will be the first successful price increase of 2013, said Rick Seaney of price-watching website FareCompare.com.

Delta started the wave Tuesday, boosting the price of tickets purchased within seven days of domestic travel by $4 to $10 round trip, Seaney said. Several other carriers have followed, including United, American and US Airways.

Southwest matched the increase on a limited scale. Its participation is usually key in guaranteeing an increase's success, because other carriers don't want to be seen as charging more than their cheapest rivals.

The increase comes as airlines reported narrower profits in 2012 than the year before. Last year, there were seven successful price increases.

"Airlines are not bashful about trying to hike domestic prices, trying on average every three weeks," Seaney said. "Luckily for consumers, they are not really good at getting them to stick."

Before the current increase, airlines had tried, and failed, three other times this year to boost prices.

Those scuttled attempts raised questions about whether fares had hit a temporary peak, with airlines nervous about charging more than travelers would pay.

Delta, for instance, tried a similar price increase last week but pulled back when other carriers didn't match it.

The current increase mostly applies to tickets popular with business travelers, who often book last-minute flights that could cost $600 to $1,500 round trip.

Meanwhile, industry trade group Airlines for America said the pending merger of American and US Airways shouldn't lead to overall higher ticket prices.

John Heimlich, the group's chief economist, won't comment specifically on the $11 billion deal announced last week but said studies of four previous mergers didn't find that they made flying more expensive.

"There is no credible evidence that (mergers) led to an increase in fares," he said Thursday.

The group also reported that even as U.S. airlines set records in efficiency, making flights on time and keeping track of luggage, their profit margin is narrowing.

By Charisse Jones | USA Today

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