New York – American Airlines backed off a $5 one-way fare increase that United Airlines began three days ago, probably scuttling the broad attempt to raise prices, J.P. Morgan Securities analyst Jamie Baker said.
American, the world’s largest airline, rescinded most of its higher prices Monday morning, Baker said in a report. The New York-based analyst said earlier Monday that United’s Friday increase on most flights longer than 1,000 miles had been matched by other major carriers over the weekend.
Delta and US Airways followed American in rolling back the fares Monday, Baker said. That left United, Continental and Northwest with the higher prices, which they were likely to scrap by the end of Monday to stay competitive, he said.
“Fare increase failures are not uncommon,” Baker said in his report. He said he expects a similar attempt to raise ticket prices “in the coming weeks.”
An industrywide fare boost would have been the second in seven days as the largest U.S. airlines try to take advantage of strong demand and limited capacity. The major carriers had 10 broad increases last year out of 16 attempts, Baker said.
American and Delta had tried to expand United’s increase to flights shorter than 1,000 miles, he said.
“We believe that this broadening effort ultimately led to the collapse,” Baker said.
United, the world’s second-largest airline, had excluded routes where it competes with Southwest, the biggest low-fare carrier.
Northwest said in an e-mailed statement it was reviewing American’s fare revisions. American, United, Delta, US Airways and Continental didn’t respond to calls for comment on Baker’s report that the increase probably would fail.
