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Published: Tuesday, 6/10/2008

Airlines roll back fare increase

ASSOCIATED PRESS
The soaring cost of fuel has spurred carriers to raise ticket prices 17 times since the beginning of this year. The soaring cost of fuel has spurred carriers to raise ticket prices 17 times since the beginning of this year.
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NEW YORK - A number of major airlines rolled back a weekend fare increase yesterday, the first time in more than half a dozen attempts that a widespread price boost failed to take hold across the struggling industry.

Carriers declined to say whether the shift signaled concerns about falling customer demand.

"This could be the first sign that demand is softening," said Graeme Wallace, chief technology officer of airfare research site FareCompare.com. "Up until now, the [airlines'] statements have been that they expect demand to stay high."

AMR Corp.'s American Airlines launched the $20 round-trip increases across much of its domestic network Saturday. That move was quickly matched by many of its closest competitors, including UAL Corp.'s United Airlines as well as Delta Air Lines Inc.

Continental Airlines Inc. was among the carriers that matched the increase over the weekend, but it rolled back the higher prices yesterday morning, putting pressure on other carriers to do the same.

Spokesman Julie King said the Houston carrier rescinded the increase "for competitive reasons."

Carriers are prohibited from collectively agreeing to raise or lower fares, but nothing stops them from following a rival's lead.

As a result, most major airlines tend to jockey for position when filing fares to a central booking system, which is updated three times daily.

Airlines have been scrambling to cut costs and increase revenue as jet fuel prices have soared 77 percent in the past year.

A number of airlines recently laid out sweeping plans to cut jobs, slash flights, and ground dozens of less efficient planes.

Carriers hope they can push fares higher by reducing the number of seats available.

Twelve of 17 increases have taken hold since the start of the year, with six of the successful increases occurring in just the last two months, according to a FareCompare tally.

Carriers typically keep airfare increases in place only if competitors match the prices on the same routes. That has prompted airlines to look for other ways to boost revenue.

American, the biggest U.S. carrier, raised the stakes last month when it became the first major carrier to say it would charge some fliers $15 to check the first bag. The airline also raised a number of other charges.

American's baggage charge is scheduled to take effect on tickets bought on or after Sunday. The carrier said last week that the $15 fee would affect fewer than one in four customers this summer and wouldn't lengthen lines at boarding gates.

Other major carriers, many of which charge to check a second bag, have not said they will begin charging passengers to stow a first bag in the cargo hold, although they are not ruling it out either.



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