United boosts airfares, but rival carriers don’t follow suit

UAL Corp.’s United Airlines, the largest carrier at Los Angeles International Airport, said Wednesday that it had raised its most popular airfares by $10 to $20 round trip and as much as $100 for last-minute tickets, which are often purchased by business travelers.

But as of Thursday, no other major airline had matched the fare increases, which a United spokeswoman said was needed to “offset the cost of fuel,” the Chicago-based airline’s highest operating expense. Jet fuel prices have climbed 16% since the start of the year.

Airline analysts said the fare increases were not likely to last because few airlines had followed the move. Indeed, a walk-up fare from LAX to New York’s John F. Kennedy International Airport on Thursday stood at $763 round trip for three major U.S. carriers, compared with $921 for United. Nonrefundable tickets purchased in advance have averaged about $400 round trip.

“I don’t think it’s going to hold,” said Joe Brancatelli, publisher of business travel website JoeSentMe.com. “The fact that nobody is following them is a pretty bad sign” for United.

In a research note to investors, Jamie Baker, an airline analyst with JPMorgan Chase & Co., said Thursday that there was “growing evidence of consumer resistance to higher fares.”

In recent weeks, several major airlines acknowledged that despite higher fuel costs, domestic fares probably would remain flat because of sluggish demand and increased competition from low-cost carriers.

United said fares on flights up to 1,500 miles rose $10 round trip, while fares on longer flights climbed $20. Tickets that are purchased last minute and are fully refundable rose $100 round trip. First-class seats purchased in advance rose $50 round trip.

Separately, MAXjet, an all-business-class airline, said Thursday that it would begin LAX-to-London service Aug. 30, with business-class seats starting at $1,399 round trip. The airline currently flies from JFK to London’s Stansted Airport.

Brancatelli said such airlines were likely to increase pressure on major U.S. carriers to keep a lid on business fares and to give leisure travelers a chance to try business-class seats that typically have been unaffordable for them.

A coach-class ticket from LAX to London currently costs about $1,100 to $1,700 round trip on U.S. carriers, if purchased in advance. A business-class seat on a major carrier purchased in advance costs more than $4,000.

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