Airlines Hike Fares on Business Passengers

By David Koenig
|  Tuesday, Feb 8, 2011  |  Updated 3:30 PM CDT
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Airlines Hike Fares on Business Passengers

AP

Airlines are raising fares on U.S. business travelers by $20 to $60 for a round-trip ticket.

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United and Continental airlines are raising fares on U.S. business travelers by $20 to $60 for a round-trip ticket.

The airlines, both owned by United Continental Holdings Inc., raised fares Tuesday on first class and instant-upgrade coach tickets.

AMR Corp.'s American Airlines and Delta Air Lines Inc. said they matched the increases.

JPMorgan analyst Jamie Baker said the "select" increases were the first recently aimed at business travelers, who are less likely to put off or cancel trips because of rising prices.

Baker said Southwest Airlines Co., an influential price-setter, can't block the increase because it doesn't sell first-class seats. Last week, it declined to go along with another broad industry fare hike, forcing rivals to roll back increases on routes where they compete with Southwest. Baker said airlines may have pushed leisure fare increases to the limit and are now turning to premium fliers.

Airlines have cited rising jet fuel prices for many of their recent price increases, made possible by a tight supply of seats. As travel demand has picked up over the past year, airlines have limited the number of available seats, driving up prices.

"The airlines can raise prices, but there's a lag to offsetting the oil prices," said Mike Derchin, an analyst with CRT Capital.

Spot prices for jet fuel have increased nearly by half, to $2.80 a gallon last week from $1.95 a gallon a year ago.

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