Continental raises published leisure air fares

[dbaker]

Continental raises published leisure air fares

CHICAGO, May 30 (Reuters) - Continental Airlines (NYSE:CAL - News) on Thursday raised most leisure fares, which could prompt another attempt by major U.S. air carriers to improve finances shaken by a drop in travel following the Sept. 11 hijack attacks.

Previous bids to raise leisure fares industrywide have failed, most recently in April when Northwest Airlines Corp. (NasdaqNM:NWAC - News) opted not to match an increase and forced other carriers to roll back increases to stay competitive.

However, there is no reason to expect Northwest's response to be different in May than it was in April and going along with an increase would run counter to the airline's philosophy on fares, UBS Warburg airline analyst Sam Buttrick said.

Travelers should try and avoid ticketing in the next day or two before this goes away. If you're trying to avoid running past an advance purchase restriction, you can buy now and keep an eye on the fare; Continental will refund you the difference (in the form of a travel voucher) if they lower it later.

[dbaker]

Airlines' Leisure Fare Hike May Fail

CHICAGO (Reuters) - A bid by major U.S. airlines to raise leisure air fares industrywide will probably fail because some carriers have only partly matched Continental Airlines (news - web sites) Inc.'s fare hike, analysts said on Friday.

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"This signals their (Northwest's) decision not to participate in Continental's fare increase," Baker said, noting that the last real fare hike was in November 2000. "Northwest has been a key blocker for all recent attempts."

Houston-based Continental, the No. 5 U.S. carrier, raised most leisure fares on Thursday and has led previous bids.

Meanwhile, Fort Worth, Texas-based American Airlines (news - web sites) said on Friday it had matched the systemwide increase and Atlanta-based Delta Air Lines , the No. 3 U.S. carrier, said it had filed similar fares to stay competitive with Continental.

Northwest, the No. 4 U.S. carrier, did not match the increase and often holds out against systemwide fare increases, forcing competitors to roll theirs back or have a pricing disadvantage with the Minneapolis-based airline.

Chicago-based United Airlines (news - web sites), a unit of No. 2 U.S. carrier UAL Corp. , and Arlington, Virginia-based US Airways , the No. 6 U.S. carrier, also said they raised only a small number of leisure fares each.

United also increased fares on routes that compete with Frontier Airlines , a Denver-based, low-cost carrier that raised fares systemwide. United has a major Denver hub.

Northwest is outperforming competitors on its revenue per available seat mile figures, a key measure of financial health also called unit revenue, so its strategy of channeling demand along its existing fare curve rather than simply raising all fares appears appropriate for Northwest, though other carriers would apparently disagree, Baker said.

[dbaker]

And it's over . . .
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